What we’re reading (3/14)
“JPMorgan Makes Bold Push To Offload Huge LBO Debt” (Bloomberg). “JPMorgan Chase & Co. is gearing up to help issuers sell billions of dollars in junk bonds and leveraged loans, with deals to fund the buyouts of Electronic Arts Inc. and Sealed Air Corp. poised to start next week. More merger and acquisition-driven transactions are in the works, including one for software firm Qualtrics International Inc. Those offerings alone total more than $30 billion in debt.”
“The Billion-Dollar AI Startup That Was Founded by Teenagers” (Wall Street Journal). “Instead of paying humans to join focus groups and complete surveys, Aaru uses thousands of AI agents, or bots, to simulate human responses. It feeds demographic and psychographic information into its models to create human profiles that match clients’ needs, and the results those bots spit out are being used for product development, pricing, identifying new customers and political polling. Aaru has done research work or conducted tests for companies including McDonald’s, Boston Beer and film studio A24, according to people familiar with the matter. It is now helping Bayer, the maker of Aleve and Aspirin, test creative copy and ad slogans for some of its brands, the drugmaker said.”
“Why ATMs Didn’t Kill Bank Teller Jobs, But The iPhone Did” (David Oks). “So what happened to bank tellers? Autor, Bessen, Vance, and the like are right to point out that ATMs did not reduce bank teller employment. But they miss the second half of the story, which is that another technology did. And that technology was the iPhone. The huge decline in bank teller employment that we’ve seen over the last 15-odd years is mainly a story about iPhones and what they made possible. But why? Why did the ATM, literally called the automated teller machine, not automate the teller, while an entirely orthogonal technology—the iPhone—actually did? The answer, I think, is complementarity.”
“Why Vlad Tenev Thinks You’ll Want Robinhood’s ‘James Bond’ Credit Card” (Semafor). “‘That’s the heaviest card ever made,’ says Vlad Tenev as he slides a silvery metallic rectangle weighing 50 grams across a conference-room table. ‘You want to be James Bond?’ Robinhood Markets’ CEO asks. ‘This is the card for you. If Sean Connery was still alive, this is the card that Q would give him to put in his wallet.’ The online brokerage debuted its platinum credit card this month, going up against industry stalwarts like American Express and JPMorgan Chase, as part of Tenev’s drive to broaden its reach beyond the meme stock traders and crypto buyers who have driven its growth.”
“Financier Who Offered ‘Guaranteed’ High Yields Pleads Guilty To Fraud” (Wall Street Journal). “Paul Regan pleaded guilty to three felony charges of securities fraud following a series of Wall Street Journal articlesin 2024 on the international financier and his mysterious high-yield investment offerings. The U.S. attorney’s office in Manhattan alleged that Regan defrauded more than 300 investors of at least $50 million based on ‘materially false and misleading’ claims. In an indictment unsealed last September, prosecutors alleged that Regan and his associates ran two investment firms ‘like a Ponzi scheme, using money obtained from earlier investors to pay later investors and to pay commissions to salespeople.’”
What we’re reading (3/13)
“Fourth-Quarter GDP Revised Down To Just 0.7% Growth; January Core Inflation Was 3.1%” (CNBC). “The first revision of the GDP reading was a sharp step down from the previous estimate of 1.4% and well below the Dow Jones consensus forecast for 1.5%. It also marked a considerable slowdown from the 4.4% gain in the prior period, hampered by a record-long government shutdown that saw government spending tumble 16.7%.”
“Judge Throws Out Subpoenas In Federal Reserve Criminal Probe” (Yahoo! Finance). “A federal judge on Friday threw out two subpoenas the Justice Department issued to the Federal Reserve, all but branding the criminal probe invalid and handing a significant victory to the Fed and its embattled Chair Jerome Powell.”
“The Hottest New Crypto Trade Is 24/7 Oil Futures” (Wall Street Journal). “While traditional energy investors spent the past weekend counting down the minutes until futures markets reopened on Sunday, overseas crypto traders were already placing their bets on the direction of oil prices. The cryptocurrency exchange Hyperliquid lists perpetual futures, a highly speculative flavor of derivatives, tracking West Texas Intermediate crude—the U.S. benchmark—and other commodities. And like other crypto-native contracts, perpetual futures trade 24/7.”
“The Trouble With State Capitalism” (Foreign Affairs). “[T]he more governments today deploy such tactics, the more difficult it will be for their successors to shelve the new playbook. This is not just a change in intensity but also a change in kind.”
“The Labor Market Consequences Of Rapid Sectoral Shifts” (John R. Grigsby and Nathan Zorzi). “Sectoral shifts require costly labor reallocation for workers, fueling concerns about how quickly they occur. We study how the pace of such sectoral shifts affects workers at risk of displacement. We develop a life-cycle model with skill heterogeneity and job ladders where labor demand gradually rises in one sector and declines in another. The model reveals three novel insights. First, workers’ lifetime earnings are strongly non-linear and even nonmonotonic in the horizon over which the transition unfolds. Second, more and more workers benefit on the extensive margin as the transition accelerates, but the tail of losses becomes thicker on the intensive margin. Third, labor market frictions are important to quantify these non-linearities. We apply our model to the climate transition and find substantial earnings losses from a transition ending in 2060. Completing the transition ten years earlier reduces average losses, but raises losses in the tail by a fifth.”
What we’re reading (3/13)
“Why The Real Market Shock Is In Long Bonds” (Yahoo! Finance). “In each of the four times the 30-year neared or broke above 5% in the past three years, stocks took a short-term hit, only to recover as yields quickly sank again, each time for different reasons.”
“U.S. Economic Outlook Cut By Goldman Over The Iran War — And The Fear Goes Beyond Oil” (MarketWatch). “Their rule of thumb is that a sustained 10% increase in oil boosts the inflation rate by 0.2 percentage points, and the core inflation rate by 0.04 points. Similarly, a sustained 10% rise in oil lowers GDP growth by a tenth, though that could be tempered depending on how domestic producers respond. The impact of tighter financial conditions also weighs on the economy. For every 1 percentage point tightening in their financial conditions index, GDP growth is hurt by 1 point over the following year. So far, Goldman’s financial conditions index has tightened by 0.2 percentage points.”
“An Exodus Of Money Endangers Wall Street’s Private-Credit Craze” (Wall Street Journal). “The private-credit engine that powered massive growth on Wall Street is sputtering, with investors trying to pull money out of big funds, forcing firms into uncomfortable decisions and endangering their future profits. The latest example came Wednesday when Cliffwater told clients that investors in its largest fund asked to cash out 14% of their money this quarter. The $33 billion fund will pay out about 50% of the redemption requests, meaning that the other half will need to wait at least another quarter to exit.”
“Do Current Trends In Drone Technology Favor Offense Or Defense?” (Marginal Revolution, from 3/16/24). “Overall, current drones seem to increase the vulnerability of fixed assets such as tanks or troop formations, or for that matter oil refineries or Moscow or Ukraine fixed landmarks. A very large and sophisticated U.S. aircraft carrier might be able to repel the drones (albeit at high dollar cost), but a bunch of tanks in an open field will not have comparable protection. In the abstract, “mid-valued assets become more vulnerable” could favor either offense or defense. The more obvious trend is that it favors nations willing and able to lose lots of mid-sized assets. That is either because a) the nation doesn’t care, because it is evil, or b) because the nation can replace them quickly, for instance by building more tanks or by drafting more soldiers.”
“Winston Churchill To be Scrapped From Banknotes As Bank Of England Panel Labels Decision ‘Overdue’” (GBI). “The Bank of England has confirmed Sir Winston Churchill will be scrapped from banknotes and replaced with images of wildlife. The central bank will soon ask the public which animals they want to appear on the next set of £5, £10, £20, and £50 notes - but confirmed the wartime hero Prime Minister would not be staying. The move to replace historical figures with animals was described as ‘significant’ and ‘overdue’ by celebrity bird-watcher Nadeem Perera, who sits on the bank's panel of wildlife experts who will choose which English species will appear on the next set of banknotes.”
What we’re reading (3/11)
“Bond Yields Jump As Oil Prices Rise, Middle East War Outlook Uncertain” (Wall Street Journal). “Yields on U.S. and European government bonds rose sharply on Wednesday as the U.S.-Israel conflict with Iran showed no signs of de-escalation and oil prices remained elevated.”
“IEA Agrees To Release Record 400 Million Barrels Of Oil To Address Iran War Supply Disruption” (CNBC). “The International Energy Agency on Wednesday agreed to release 400 million barrels of oil to address the supply disruption triggered by the Iran war, the largest such action in the organization’s history.”
“Oil Jumps As Iraq Halts Ports, IEA Release Fails To Quell Rally” (Bloomberg). “Brent crude rallied back toward $100 a barrel as Iraq stopped operations at its oil ports after two tankers were targeted, overshadowing a record release of emergency reserves from wealthy nations.”
“Smart Money, Dumb Money, It’s All Just Money” (Wall Street Journal). “For every bit of evidence showing that individual investors do dumb things, there’s at least one showing that institutions do, too.”
“AI Is A Five Layer Cake” (Jensen Huang). “AI is one of the most powerful forces shaping the world today. It is not a clever app or a single model; it is essential infrastructure, like electricity and the internet. AI runs on real hardware, real energy and real economics. It takes raw materials and converts them into intelligence at scale. Every company will use it. Every country will build it. To understand why AI is unfolding this way, it helps to reason from first principles and look at what has fundamentally changed in computing.”
What we’re reading (3/10)
“IEA Proposes Largest Ever Oil Release From Strategic Reserves” (Wall Street Journal). “The International Energy Agency has proposed the largest release of oil reserves in its history to bring down crude prices that have soared during the U.S.-Israel war with Iran, officials familiar with the matter said. The release would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine, the officials said. The proposal was circulated at an emergency meeting of energy officials from the IEA’s 32 member countries on Tuesday. Countries are expected to decide on the proposal Wednesday. It would be adopted if none objects, but even one country’s protests could delay the plan, officials said.”
“Diesel Markets, Upended By Middle East Conflict, Threaten Global Economic Slowdown” (Reuters). “‘Diesel is the most exposed product to this conflict structurally,’ Shohruh Zukhritdinov, founder of Dubai-based Nitrol Trading, said. ‘Diesel underpins freight, agriculture, mining and industrial activity, making it the most macro-sensitive barrel in the system.’”
“Iran Conflict Triggers Losses For Citadel, Millennium And Point72” (Wall Street Journal). “Citadel, Millennium Management and Point72 were among those hit by the market fallout, according to people familiar with the matter, as were Balyasny Asset Management and ExodusPoint Capital Management. Millennium and Point72 each lost $1.5 billion last week, the people said, while Citadel lost about $1 billion in its fixed-income and macro business. While there wasn’t a particular trade that stoked the losses, some funds were hit by macroeconomic bond-market bets that went awry. That includes the popular steepener trade, in which investors bet on a widening gap between short- and long-dated bond yields. Balyasny lost about $1 billion, including $700 million in its fixed-income business alone, the people said. ExodusPoint lost a couple hundred million dollars on bond-market bets.”
“This Is The Moment Adam Smith Has Been Waiting For” (Jason Furman in the New York Times). “Perhaps the most neglected Smithian virtue in our current discourse is optimism. “The Wealth of Nations” cataloged policy failures and abuses, but it also marveled at the living standard of people in the Britain of his day. Even though the richest person at the time would seem impoverished by today’s standards — lacking even indoor plumbing, to say nothing of flat-screen TVs — Smith was still effusive about the ‘liberal reward of labor’ that narrowed the gap between a prince and “an industrious and frugal peasant.”
“Bubbles, Booms And Crashes In The US Stock Market 1792-2024” (William N. Goetzmann, Otto Manninen, and James Tyler). “We examine the historical frequency of stock market booms, crashes, and bubbles in the United States from 1792 to 2024 using aggregate market data and industry-level portfolios. We define a bubble as a large boom followed by a crash that reverses the market’s prior gains. Bubbles are extremely rare. We extend the industry-level analysis of Greenwood, Shleifer, and You (2019) through 2024 and replicate their findings out of sample using Cowles Commission industry data from 1871 to 1938. Booms do not reliably predict crashes, but they do predict higher subsequent volatility, increasing the likelihood of both large gains and large losses.”
What we’re reading (3/9)
“Dow, S&P 500, Nasdaq Futures Fall, Oil Slides After Volatile Day On Wall Street” (Yahoo! Finance). “A swift decline in oil prices on Monday followed comments from Trump suggested that the war with Iran had largely concluded. Speaking to CBS News, Trump said the war was ‘very complete, pretty much,’ adding that opposing forces had effectively lost their naval and air capabilities. Trump also said that he believes the war is ‘very far’ ahead of the four-to-five week military timeline that was initially suggested.”
“G7 Energy Ministers To Meet Tuesday Morning To Discuss Release Of Oil Reserves, Sources Say” (CNBC). “The talks between the G7 have been ‘positive,’ the sources said. Any coordinated action on releasing reserves would occur after the energy ministers’ meeting, they said. The U.S. believes a joint release of 300 million to 400 million barrels, representing 25% to 30% of the 1.2 billion barrels in the reserve, would be appropriate, sources told CNBC.”
“Is The Nightmare Scenario For Global Energy Here?” (Daniel Yergin in the Financial Times). “Iran was once one of the key oil suppliers to the world. No longer. Its exports, constrained by sanctions, amount to less than 2 per cent of global supplies, most of which go to China at discounted prices. A similar change has taken place in Venezuela. Once a star of world oil and one of the founding members of Opec, today it can hardly even be called a petrostate. It produces less oil than the US state of North Dakota and a quarter as much as neighbouring Brazil.”
“Gold Steadies After Trump Signals Iran War May Be Nearing End” (Bloomberg). “Gold steadied, after the US dollar retreated on comments by President Donald Trump that the war in the Middle East could be nearing an end. Bullion was near $5,140 an ounce in early trading, having lost 0.6% in the previous session, after Trump said he believed the conflict with Iran would be resolved ‘very soon.’ A gauge of the dollar fell as much as 0.1%, extending a decline on Monday. Oil tumbled after an exceptionally volatile session.”
“There’s Another Energy Market That May Get Hit Harder Than Oil By Strait Of Hormuz Closure” (CNBC). “[W]hile many states in the Middle East produce oil, gas production is concentrated at one industrial complex in Qatar, making the market much more vulnerable going forward, noted Alex Munton, director of global gas and LNG research at Rapidan Energy. The real risk, Munton said, is how difficult it will be to restart Qatar’s LNG production at Ras Laffan once traffic resumes in the Strait. Given the complexities of cooling gas, which is fundamentally an industrial process, it will take much longer to restart than oil production.”
What we’re reading (3/5)
“Gold Declines As Strong Dollar, Fed Outlook Outweigh War Premium” (Bloomberg). “Gold declined, pressured by strength in the dollar and the prospect of less monetary easing as the war in the Middle East entered a sixth day with no sign of resolution. Bullion fell as much as 1.7% in US trading as inflation worries stemming from higher energy prices lifted the greenback and Treasury yields. High inflation may prompt the Federal Reserve to hold rates steady or even hike them to contain price pressure. Swaps traders are currently pricing in about 35 basis points of rate cuts by year-end, compared with 60 basis points at the end of last week. That’s negative for bullion as it pays no interest.”
“The February Jobs Numbers Are Coming Out Friday. Here’s What To Expect” (CNBC). “The 2025 labor market has been generously described as ‘unstable,’ with virtually no jobs growth and a slew of headwinds expected to conspire against it. In 2026, though, the buzzword seems to be ‘stable,’ even though conditions seem to be largely the same. The picture continues to be of a low-hire, low-fire climate, where companies are both reticent to lay off employees as demand continues to be strong, but also are leery of adding staff amid uncertainty over tariffs, inflation and geopolitics. However, characterizations coming from Federal Reserve officials and market economists have grown at least a bit more optimistic — stressing the stability, if not the robustness, of the labor market. The difference between this year and last? Expectations.”
“Investors Can Still Outwit AI, But Only If They’re Unpredictable” (Joachim Klement). “What emerges from the data is an interesting split. When dealing with common cognitive biases, like the gambler’s fallacy or base-rate neglect, where genAI can fall back on well-established mathematical formulas, the answers are largely free from bias. One can therefore expect that in forecasting situations in which humans may be subject to such biases, genAI will likely outperform investors made of flesh and bone. But when dealing with problems that have a large degree of qualitative uncertainty or where the answer requires a judgment call, genAI is just as biased as most humans. When the model can’t rely on a mathematical answer, it has to deduce a solution from its training data. And the training data is mostly man-made and thus codifies the same biases as humans. It’s a case of garbage-in, garbage-out.”
“Crypto Fans Have an Alternative to Savings Accounts. Banks Are Freaking Out.” (Wall Street Journal). “Stablecoins aren’t yet widely used as savings or checking accounts, and mostly remain a way for the crypto conversant to buy other digital tokens or transfer money. But the coins are starting to catch on among some crypto users as a way to park money and earn yields—a development that banks are determined to stamp out before it gets any bigger. It is enough of a threat that the tokens are now at the center of a fight holding up President Trump’s push to formalize crypto’s role in the financial system.”
“Retail Investors Will Be Ripped Off In Private Markets With SEC Approval” (Better Markets). “Private credit firms have been angling to attract retail investors, because more money coming in is, of course, good for business. But retail investors don’t behave the same way institutional players do, and when the panic begins in private markets, there are no guardrails to protect individuals the way there are in banking.”
What we’re reading (3/4)
“Stocks Recoup Some Losses But Close Lower As Middle East Conflict Stirs Up Volatility” (CNN Business). “Global stocks closed lower Tuesday after a volatile day that saw the Dow briefly tumble by more than 1,200 points as concerns linger among investors that the widening conflict in the Middle East could escalate further. The Dow closed lower by 404 points, or 0.83%, paring earlier losses. The S&P 500 sank 0.94% and the Nasdaq moved 1.02% lower, partially recovering from earlier declines of nearly 2.5% and 2.75%, respectively. Wall Street’s fear gauge, the VIX, was up 10% after briefly rising as much as 31%. The VIX settled at its highest level in just over three months. Stocks in Europe and Asia were also lower for a second day.”
“Morgan Stanley Lays Off 2,500 Employees Across All Divisions” (Wall Street Journal). “Morgan Stanley is laying off around 3% of its workforce or about 2,500 people, according to people familiar with the matter. The cuts are affecting employees in the bank’s three major divisions, the people said, which are investment banking and trading, wealth management and investment management. They are tied to shifting business and location priorities—as well as individual job performance—and are occurring both in the U.S. and abroad, one of the people said.”
“Why Treasurys Are Failing Their Biggest Test In Decades — And What You Should Own Instead” (MarketWatch). “U.S. Treasurys are providing more evidence that they’re no longer safe havens during times of crisis. Treasury bonds used to be places for investors to weather geopolitical upheaval. Whenever investors shifted to ”risk off” from “risk on,” out went stocks and other risky assets in favor of what was perceived as the world’s safest asset: U.S. government bonds. Recently, the opposite has been the case[.]”
“We Are In The Midst Of An Astonishing Productivity Miracle” (RealClear Markets). “Health insurance companies employ over one million employees to process claims. That figure does not include the administrative staff employed by your family doctor or local hospital to also prepare and submit those same claims. The result? Claims are entered incorrectly, fraud proliferates, inefficiencies abound, providers often wait 90 days or more to be paid—if they are paid at all—and patients are frequently left with bills they do not owe. Suppose there was a system that eliminated this mess.”
“Apple Debuts $599 MacBook Neo, Targeting Schools And Small Businesses” (Yahoo! Finance). “‘This is one of the most important announcements for Apple in the Mac product line and represents a shift in the history of the Mac. Apple has always positioned the MacBook as a premium computing product, with entry prices typically starting near or above $999,’ International Data Corporation vice president of client devices Francisco Jeronimo said.”
What we’re reading (3/3)
“In A Day Of Wild Market Moves, Oil Is A New Haven” (Wall Street Journal). “It’s natural to think that with the U.S. and Israel starting a new war in the Middle East, the fall in stock prices would come with a rush for havens. And it would be easy to mistake the big rise in the dollar for investors seeking safety in the normal way. But it would be wrong. Instead, the moves on Tuesday look much more like an oil-price reaction, combined with cutbacks in overextended winning positions. Sure, the dollar index rose about 1% at its best, which is typically part of a search for safety. But currencies usually regarded as even safer in a crisis fell against the greenback: The Swiss franc was down 0.5% at the same time, the yen off 0.3% and gold down 4%.”
“Oil Prices Surge As Analysts Say Iran Conflict ‘May Be Different’ From Previous Flare-Ups” (Yahoo! Finance). “Markets have largely learned to downplay conflict-driven oil shocks, with crude prices often recovering quickly after an initial pop. But analysts say the most recent Iran strikes could be different. Oil prices have surged by roughly 15% since the US and Israel began a major airstrike campaign against Iran on Saturday, killing Supreme Leader Ayatollah Ali Khamenei and provoking a violent and chaotic response from Iran that has engulfed the Middle East.”
“Gold Tumbles Amid Broader Market Sell-Off As Dollar Rises” (Yahoo! Finance). “Bullion touched its lowest level since February, wiping out gains accrued following the US and Israeli strikes on Iran over the weekend. Investors weighed the inflationary effects of higher oil prices and the growing likelihood that the Federal Reserve may cut interest rates less than previously expected.”
“Can A.I. Be Pro-Worker” (The New Yorker). “The three M.I.T. economists don’t underestimate the scale of the challenge. “None of the big companies are pouring even a small fraction of their investment into developing A.I. as a pro-human, pro-worker tool,” Acemoglu said in his interview. To reorient things, he and his colleagues make a series of policy recommendations, including changing the tax laws, fostering competition in the A.I. sector, and giving workers a direct stake in A.I. One key proposal is for the government to use its financial power—both as a provider of research grants, and as a buyer and user of technology systems—to push the development of A.I. in a pro-worker direction.”
“Having Your Own Government Try To Destroy You Is (At Least Temporarily) Good For Business” (Astral Codex Ten). “Anthropic isn’t publicly traded, so we turn to the prediction markets. Ventuals.com has a ‘perpetual future’ on Anthropic stock, a complicated instrument attempting to track the company’s valuation, to be resolved at the IPO…Upon the “supply chain risk” designation, predicted value at IPO fell from about $550 billion to $475 billion - then, after a day or two, went back up to $550 billion. No effect!”
What we’re reading (3/2)
“US Stocks Recover, Gold Rises And Oil Surges As War With Iran Spreads” (CNN Business). “Oil prices surged, US stocks erased earlier losses and gold rose Monday as financial markets digested concerns about a broadening war with Iran. Investors are bracing for volatility in global energy markets as developments unfold in the Middle East. While markets saw sharp moves, the volatility so far has been largely as expected, and Wall Street is on watch for potential further disruptions to oil and gas prices.”
“How High Can Oil And Gas Prices Go Because Of The Iran War? Here Are The Scenarios” (CNBC). “The global oil market is facing a worst-case scenario as the U.S. war with Iran engulfs the Middle East with no clear off-ramp, increasing the risk of a prolonged supply disruption that could slow the global economy. Tanker traffic through the Strait of Hormuz, the world’s most important chokepoint for oil shipments, has come to a standstill as ship owners take precautionary measures. About a third of the world’s total seaborne oil exports passed through the Strait in 2025, according to energy consulting firm Kpler.”
“What It Would Take For Oil To Reach $120 Per Barrel, According To JPMorgan” (MarketWatch). “‘Beyond the initial knee-jerk reaction, the trajectory of oil prices will ultimately depend on four variables: how many barrels are physically disrupted; how long the disruption lasts; in a prolonged disruption, whether credible replacement supply — including potential releases from strategic reserves — can be mobilized quickly enough to avoid a structural tightening of the global oil balance; and what comes next,’ says [JPM strategist Natasha] Kaneva.”
“Airlines Grapple With Disruptions That ‘Far Surpass’ Previous Middle East Conflicts” (Wall Street Journal). “‘The situation far surpasses anything we’ve seen in the Middle East previously,’ said Matt Borie, chief intelligence officer at aviation risk firm Osprey, citing the vast scale of Iran’s retaliation across the region following last weekend’s broad attacks from Israel and the U.S.”
“Goldman Traders See ‘Painful’ Path For US Stocks Before Rebound” (Bloomberg). “US equities may need to pull back further before they can mount a durable advance, Goldman Sachs Group Inc.’s trading desk warned, citing fragile sentiment and choppy flows that left the S&P 500 vulnerable after its latest attempt to clear the 7,000 level fizzled. ‘The only way up is down from here,’ Goldman’s trading desk team including Gail Hafif and Brian Garrett wrote in a note to clients. A broadly supportive macro backdrop has done little to help stocks absorb geopolitical tensions and sharp swings in commodity prices, creating what the bank’s traders called a ‘painful’ near-term path.”
February performance update
Prime: +2.91%
Select: +4.88%
SPY ETF: -0.52%
Bogleheads Portfolio (80% VTI + 20% BND): +0.12%
March picks available now
The new Prime and Select picks for March are available starting now, based on a model run put through today (February 28). As a note, I will be measuring the performance on these picks from the first trading day of the month, Monday, March 2, 2026 (at the mid-spread open price) through the last trading day of the month, Tuesday, March 31, 2026 (at the mid-spread closing price).
What we’re reading (2/27)
“Tech Has Never Caused A Job Apocalypse. Don’t Bet On It Now.” (Wall Street Journal). “I keep stumbling over one small problem with the doomsday vision: It requires a breakdown in how the market economy functions. Nothing like it has happened in the U.S. before, and there is no evidence it is happening now.”
“No, AI Is Not About To Kill The Software Industry” (Fast Company). “Wall Street’s apparent belief that AI spells bad news for today’s software titans is premature, and possibly just misguided, period. It’s certainly heavy on vibes rather than hard data: Monday’s dip in the S&P 500 apparently stemmed in part from a dystopian imaginary June 2028 memo published by Citrini Research. Laying out a sweeping nightmare involving AI crushing the U.S. economy, it name-checked specific companies such as DoorDash and Zendesk as being incapable of competing with AI-infused apps and agents. Well, maybe, though even the document’s authors admitted they were ‘certain some of these scenarios won’t materialize.’”
“Crypto Is Pointless. Not Even The White House Can Fix That.” (Ryan Cummings and Jared Bernstein). “ Since its peak last fall, Bitcoin, the world’s largest cryptocurrency, has lost almost half its value. Nearly $2 trillion of wealth has evaporated from the global crypto market since October. We have one question. What took so long? Outside of crimes and scams, the technology is useless, and its economics are even worse.”
“Six Months, 9 Offers And $81 Billion. How Hollywood’s Nasty Takeover Was Won.” (Wall Street Journal). “The dramatic bidding war ended on Thursday night, after Paramount made its latest attempt to buy Warner for $81 billion—and Netflix walked away from the deal. Shortly after photographers snapped Netflix co-CEO Ted Sarandos leaving the White House, the company announced that it wouldn’t match Ellison’s latest offer, which was 63% higher than his first.”
“Does Overwork Make Agents Marxist?” (Ghosts of Electricity). “The key finding from our experiments: models asked to do grinding work were more likely to question the legitimacy of the system. The raw differences in average reported attitudes are not large—representing something like a 2% to 5% shift along the 1 to 7 scale—but in standardized terms they appear quite meaningful (Sonnet’s Cohen’s d is largest at -0.6, which qualifies as a medium to large effect size in common practice). Moreover, these should be treated as pretty conservative estimates when you consider the relatively weak nature of the treatment.”
What we’re reading (2/26)
“Jack Dorsey’s Block To Lay Off 40% Of Its Workforce In AI Remake” (Wall Street Journal). “Block the payments company founded by Jack Dorsey that includes Square and Cash App, said Thursday that it plans to lay off 40% of its workforce, or more than 4,000 employees. Dorsey alluded to artificial-intelligence tools as the reason for the cuts in a letter to shareholders. ‘The core thesis is simple,’ wrote Dorsey. ‘Intelligence tools have changed what it means to build and run a company.’”
“The 2026 Global Intelligence Crisis” (Citadel). “[M]arkets often extrapolate the acceleration phase linearly but history implies pace of adoption plateaus as organizational integration is costly, regulation emerges and diminishing marginal returns exist in economic deployment. The risk of displacement declines with a slower pace of adoption.”
“I Thought I Understood A.I. Companies. I Couldn’t Have Been More Wrong.” (Jason Furman). “[T]he real story of the most consequential technology of our time is strikingly different from what it seems. Instead of consolidating, as so many other industries have done, the leading edge of A.I. has become fiercely competitive. The result has been a staggering pace of innovation, significant reductions in costs and an expanding array of choices for consumers and businesses alike.”
“Data Center Builders Thought Farmers Would Willingly Sell Land, Learn Otherwise” (ars technica). “One 82-year-old Kentucky woman, Ida Huddleston, turned away a ‘Fortune 500 company’ offering $33 million for 650 acres. NBC News reported that several of her neighbors received similar offers. Huddleston joined at least five other residents in the county who refused to move forward after learning they’d have to sign a non-disclosure agreement just to find out who they would be dealing with.”
“It Must Be Very Hard To Publish Null Results” (Ryan Briggs, Jonathan Mellon, and Vincent Arel-Bundock). “In this article, we use large language models to extract granular and validated data on about 100,000 articles published in over 150 political science journals from 2010 to 2024. We show that fewer than 2% of articles that rely on statistical methods report null-only findings in their abstracts, while over 90% of papers highlight significant results. To put these findings in perspective, we develop and calibrate a simple model of publication bias. Across a range of plausible assumptions, we find that statistically significant results are estimated to be one to two orders of magnitude more likely to enter the published record than null results.”
What we’re reading (2/25)
“Nvidia Beats Back Bubble Fears With Record $68 Billion In Sales In Fourth Quarter” (Wall Street Journal). “Nvidia reported a 94% increase in profit and record sales for the fourth quarter, helping ease concerns over a possible artificial-intelligence bubble that rippled through markets in recent months.”
“Nvidia Beats On Q4 Expectations And Offers Better-Than-Anticipated Q1 Outlook” (Yahoo! Finance). “Nvidia (NVDA) reported its fiscal fourth quarter results after the bell on Wednesday, beating analysts' expectations on the top and bottom lines. The company also offered Q1 guidance between $76.44 billion and $79.56 billion, above Wall Street's estimates of $72.8 billion.”
“Salesforce Shares Sink On Mixed Guidance As Company Commits $50 Billion For Buybacks” (CNBC). “Salesforce shares tumbled 5% in extended trading on Wednesday after the customer service software maker reported healthy results, although its fiscal 2027 revenue view trailed Wall Street projections.”
“Refine” (John Cochrane). “I recently tried refine, an AI tool for refining academic articles, developed by Yann Calvó López and Ben Golub. I sent it the current draft of my booklet on inflation, to see what it can offer. I just used it once so far, with the free trial mode. I will be a regular user forever. The results are stunning. The comments it offered were on the par of the best comments I’ve received on a paper in my entire academic career. And more concise and organized than the best ones. They aren’t perfect, but the kind of analysis the program is able to do is past the point where technology looks like magic. I don’t know how you get here from ‘predict the next word.’”
“The Tax Nerd Who Bet His Life Savings Against DOGE” (Wall Street Journal). “Cole is a 37-year-old tax economist with Ivy League degrees, a mortgage and a young child. Until Elon Musk’s Department of Government Efficiency came roaring into the nation’s capital last year, he was largely a plain-vanilla investor or, as he puts it, a ‘normal, conventional Wall Street Journal-reading adult.’ But Musk’s boasts and his eager fans brought an unusual opportunity into the burgeoning U.S. prediction markets: People willing to bet that the world’s richest man would transform and shrink the federal government. Cole took the opposite position[.]”
What we’re reading (2/24)
“AI-Induced Tech Selloff Spoils The IPO Parade” (Wall Street Journal). “This was supposed to be a blockbuster year for initial public offerings. Artificial-intelligence fears spoiled the party. Investors have been thirsting for new issues, and big names including SpaceX, OpenAI and Anthropic are readying debuts for later this year. The momentum created an opening for dozens of smaller, mainly private-equity backed software firms that had been waiting in the wings.”
“Nvidia To Report Q4 Earnings Ahead Of Annual GTC Event” (Yahoo! Finance). “AI behemoth Nvidia (NVDA) will report its fourth quarter results after the bell on Wednesday, the most anticipated announcement of the earnings season. The news comes just a few weeks before the company is set to host its GTC 2026 event in San Jose, Calif., where it's expected to make a number of major product announcements.”
“Is There An Aggregate Demand Problem In An AGI World?” (Marginal Revolution). “No. Let’s say AI is improving very rapidly, and affecting the world more rapidly and more radically than I think is plausible. Let’s just say. All of a sudden there are incredible things you can spend your money on. Since there is (possibly) radical deflation, you might be tempted to just hold all your money and buy nothing. Pick vegetables from your garden. But the high marginal utility of the new goods and services will get you to spend, especially since you know that plenitude will bring you, in relative terms, a lower marginal utility for marginal expenditures in the future. You might even go crazy spending. If nothing else, buy new and improved vegetable seeds for your garden. That same example shows that spending is robust to you losing your job, even assuming no reemployment is possible. In this world, there are significant Pigou effects on wealth…[t]he whole Citrini scenario is incorrect right off the bat. Very little of it is based on sound macroeconomic reasoning.”
“It’s A Buyer’s Market, But Homeownership Eludes Many Americans” (New York Times). “High down payments. Elevated interest rates. A lack of affordable homes. Even in what economists call a buyer’s market — where supply outpaces demand — many house hunters say the math still doesn’t work.”
“Hidden Alpha” (Manuel Ammann, et al.). “We provide novel evidence suggestive of insider trading through concealed relationships identified using information from over 100,000 Facebook profiles and their 35 million friends. Focusing on connections between fund managers and firm officers, we demonstrate that hidden ties are linked to substantial abnormal returns averaging 135 basis points per month (exceeding 16% alpha annually, t-stat = 3.54) across the universe of mutual funds and public firms. These hidden ties emerge as the most powerful predictor of future stock returns among documented network characteristics, with predictive power increasing over time through the present day. The premium associated with such connections arises not from endogenous selection or familiarity bias; instead, fund managers exhibit specific timing ability in deciding when to hold (or avoid) stocks of firm officers linked through hidden ties. The value of trading information rises with the degree of concealment and is concentrated around earnings and M&A events. The premium is absent in index funds, where strategic stock selection and timing are infeasible. Our findings on the value of hidden ties remain robust across industries, investment styles, time periods, and firm types.”
March picks available soon
I’ll be publishing the Prime and Select picks for the month of February before Monday, March 2 (the first trading day of the month). As always, SPC’s performance measurement for the month of February, as well as SPC’s cumulative performance, will assume the sale of the February 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, February 27).
What we’re reading (2/21)
“Centerview Settles Suit Over Young Banker Hours” (Wall Street Journal). “The trial had been set to begin Monday and was expected to feature testimony from senior executives at Centerview, including the firm’s co-president Tony Kim, as well as Shiber. Bankers across Wall Street have been following the lawsuit and anticipating the trial and its implications for the industry. ‘There is a genuine dispute of fact whether the ability to be available at all hours of the day and to work long, unpredictable hours is an essential function of the analyst role,’ Judge Edgardo Ramos wrote in an October opinion detailing why the case would go to trial.”
“Europe’s Military Buildup Could Create A Bond Market Powerhouse That Threatens U.S. Treasurys” (MarketWatch). “As countries rush to finance defense spending and build resilience, the fiscal and financial consequences are only beginning to surface. Long-term sovereign yields in advanced economies — from Germany to Japan—are rising to levels last seen decades ago. The risk for the U.S. is that such dynamics will act as a gravitational pull on domestic long-term yields as the Trump administration focuses on lowering borrowing costs for households to address an affordability crisis.”
“Christine Lagarde Isn’t Done Trying To Fix Europe” (Wall Street Journal). “In a sign that Lagarde’s patience with the EU’s slow progress is wearing thin, this month she sent a checklist of five urgently needed reforms to EU leaders, with the subject line: “time for action,” according to a copy seen by the Journal. Among them: unifying capital markets, harmonizing corporate regulations and coordinating research and development spending.”
“US Private Sector Balance Sheets In Excellent Shape” (Torsten Slok). “The private sector in the US is in really good shape. Households have been deleveraging since the 2008 financial crisis, see the first chart. The corporate sector has been deleveraging since COVID…[u]nfortunately, the government balance sheet is not in good shape. Government debt to GDP has increased steadily from 40% of GDP in 2007 to more than 100% today, see the third chart.”
“Oil Analysts Say There Is A Supply Glut — Why That Hasn't Translated To Lower Prices This Year” (Yahoo! Finance). “Coming into 2026, the consensus view among oil analysts was that the crude market was entering a period of deep oversupply, likely to keep depressing prices throughout the year. In 2025, oil prices fell by roughly 20% as the glut widened. Instead, oil prices have seen an unexpected rally through the start of the year on a combination of geopolitical shocks and stronger-than-expected demand.”
What we’re reading (2/20)
“After Stunning Setback, Trump Finds Other Ways To Impose Tariffs” (New York Times). “President Trump moved swiftly on Friday to resurrect his punishing tariffs and circumvent a stunning loss at the Supreme Court, ordering a new 10 percent tax on all imports along with other trade actions in a bid to preserve his primary source of economic leverage around the world.”
“Economic Growth Slowed In Fourth Quarter, Hurt By Government Shutdown” (Wall Street Journal). “U.S. economic growth slowed sharply at the end of last year, weighed down by a record-long government shutdown and cooler consumer spending. U.S. gross domestic product—the value of all goods and services produced across the economy—rose at a 1.4% seasonally and inflation adjusted annual rate in the final quarter of last year, the Commerce Department said Friday.”
“OpenAI Forecasts Its Revenue Will Top $280 Billion In 2030” (Bloomberg). “OpenAI is projecting that its revenue will grow at a fast clip in the next few years and exceed $280 billion in 2030, according to a person familiar with the matter. The revenue forecast reflects OpenAI’s strong momentum in subscription sales for its AI software to consumers and businesses. OpenAI also recently began testing advertising for certain users, creating a new potential moneymaker for the company.”
“Egg Prices Have Plummeted. That’s Great News For Consumers — And A Crisis For Farmers.” (CNN Business). “Egg prices have been plummeting. That’s great news for American shoppers, but bad news for American farmers. The average price of a dozen eggs at the grocery store is $2.58, according to the Bureau of Labor Statistics. That’s about half of what many consumers were paying a year ago. Bird flocks have been on the rebound after last year’s avian flu outbreak, but that has farmers suddenly selling at a loss.”
“Crime As Proxy For Disorder” (Astral Codex Ten). “The problem: people hate crime and think it’s going up. But actually, crime barely affects most people and is historically low. So what’s going on?”
What we’re reading (2/19)
“Investors Brace For ‘Knee-Jerk Market Reaction’ To A Coming Supreme Court Tariff Decision” (Yahoo! Finance). “Researchers at JPMorgan offered a variety of scenarios Thursday for how things might play out: a victory for Trump that upholds his tariff regime, a defeat that strikes it down, or even a third outcome in which tariffs are struck down only after the midterms. Any of those could lead to an immediate swing in the S&P 500 (^GSPC) from down 1% to up 2%, depending on the specifics, the researchers wrote.”
“Why Risk-Loving Options Traders Are Flocking To Prediction Markets” (Wall Street Journal). “Key players in the options industry are looking to adapt to the wave of interest in prediction markets. Exchange operator Cboe Global Markets is looking into launching “all-or-nothing” options. Those could include binary contracts that allow investors to make simple yes or no wagers on future events, such as whether the S&P 500 will close below or above a certain level. Like prediction-markets contracts, they would either pay a set cash settlement, or nothing at all.”
“Blue Owl Limits Investor Withdrawals, Stirring Private Credit Concerns” (Bloomberg). “Blue Owl Capital Inc. shares tumbled after a decision to restrict withdrawals from one of its private credit funds raised fresh concern over the risks bubbling under the surface of the $1.8 trillion market. Shares of the alternative asset manager fell about 10% on Thursday to their lowest level in two and a half years.”
“Why Is The LDS Church Dumping Billions In Stocks?” (Salt Lake Tribune). “New filings with the U.S. Securities and Exchange Commission indicate Ensign Peak Advisors — with a portfolio now worth just over $56 billion — sold nearly $5.6 billion in stocks and other equities in the final quarter of 2025, representing about 9% of its overall value. That unloading followed the quarter before in which the Salt Lake City-based investment-management arm of the global faith liquidated $2.1 billion of its holdings, for a total of $7.7 billion sold within six months.”
“Meta Cuts Stock Awards By 5% For Most Employees, FT Reports” (Yahoo! Finance). “Meta has slashed equity-based awards for the bulk of its employees for the second year in a row, the report said, citing people familiar with the matter. Last year, the company had cut the stock award by roughly 10%, which shocked some staff at the time, the FT report said. Meta last month laid off about 10% of employees within its Reality Labs group, which had about 15,000 workers, as the company redirects resources from some of its virtual reality products to wearables.”