2025-06-06 23:18:35
In the war between Trump & Musk, I’m rooting for the bullets. However, the whole thing is (again) a distraction from the significant damage being levied on the country. It’s tempting to believe America will emerge from the Trump chaos unscathed. It won’t.
The defining features of this presidency are cruelty and chaos — but chaos with a purpose. Share prices plunge following tariff threats, only to rally when he backs down. The White House attempts to bar Harvard from enrolling international students, then gets blocked by the courts. Trump calls for Fed Chairman Jerome Powell to be fired, then insists days later he has “no intention” of terminating him. Even if most of his promises go unfulfilled, the long-term damage will be severe.
If Trump were a poker player, he’d swagger to the table talking shit, go all in, then fold before his opponents respond. It’s easy to dismiss this behavior as crazy or incompetent. But it raises a troubling question: Is this a deliberate effort — straight out of an autocrat’s playbook — to create volatility that the autocrat and his acolytes can exploit? What if this isn’t incompetence, but a strategy?
Financial Times columnist Robert Armstrong coined the perfect term: the TACO trade — Trump Always Chickens Out. But Armstrong told us on Prof G Markets that chaos may be the point: Trump and his team have such contempt for the system, they don’t see any downside risk in burning the village to save it.
These policy gyrations have created an association of “toxic uncertainty” with brand USA. Announcing more than 50 new or revised tariff policies in a matter of months makes no sense, until it does. Trump’s market manipulation operates like a carnival game — it’s rigged. The house always wins, as it knows when the music is about to stop.
Trump’s ability to trigger wild swings in stock prices has created an environment ripe for insider trading, undermining trust in U.S. markets and eroding a pillar of American prosperity — the rule of fair play. When Trump shocks the market and then retreats, it gives his inner circle, both in Washington and on Wall Street, an opportunity to place trades with asymmetric upside. They have information the other players (whether they’re buying or selling) don’t possess.
Trump’s tariff proclamations have created some of the most extreme market volatility in decades:
Multi-trillion-dollar swings happening within hours of his statements aren’t market forces — they’re signs of manipulation with a presidential seal. The markets are essentially reacting in real time to his policy announcements and reversals, creating unprecedented uncertainty for investors … and opportunity for those who are inside.
A string of incredibly prescient trades has sparked concern that Trump’s allies may be trading on material nonpublic information. ProPublica reported that more than a dozen high-ranking officials made well-timed trades following Trump’s inauguration — most selling stock before markets tanked.
Attorney General Pam Bondi sold $1 million to $5 million in Trump Media stock on April 2, the same day the president announced his Liberation Day tariffs. The timing of her trades that day is unclear. But think about that: The nation’s top cop is selling stocks the day an announcement by the president ignites a crash in prices. Trump Media slipped 13% in the following days, before recovering.
Wow. What. Luck.
Most damaging: On April 9, Trump posted a message to followers on Truth Social: “THIS IS A GREAT TIME TO BUY!!! DJT.” Less than four hours later, he announced a tariff pause, sending stocks soaring. Billionaires tracked by Bloomberg enjoyed their best day ever, adding more than $300 billion to their combined net worth.
Maxine Waters, the California Democrat, zeroed in on suspicious call option trading in the 10 minutes before Trump’s announcement. “No rational investor would have purchased these options unless they had prior knowledge of the president’s impending reversal on tariff policy,” she and her House colleagues wrote in an April 10 letter to Securities and Exchange Commission Chair Paul Atkins requesting an investigation.
Less than two weeks later, Treasury Secretary Scott Bessent, speaking at a closed-door investor summit hosted by JPMorgan Chase, said he expected a “de-escalation” in Trump’s trade war with China. Stocks, which had already started recovering after a sharp drop the previous day, soared after Bessent’s comments were reported.
Elizabeth Warren demanded an explanation. The Massachusetts senator argued in a letter to Bessent that Trump’s opaque tariff decisions and “frequent, seemingly random changes of course have created a scenario where wealthy investors and well-connected corporations can get special treatment, receiving inside information they can use to time the market, or obtaining tariff exemptions that are worth billions of dollars — while Main Street, small businesses, and America’s families are left to clean up the damage.”
In late May, stocks dropped again after Trump threatened to raise tariffs to 50% on goods from the EU. But when the president subsequently said those tariffs would be delayed until July, his comments triggered a global rally over the next two days.
The White House has announced a flurry of new and revised tariff policies since Inauguration Day in January. But I’m willing to bet that very little will change over the next year or two when it comes to trade policy. I also predict that Trump will fail to follow through on most of his threats, on everything from tariffs to Harvard, as he backpedals or gets stymied by the courts.
The country’s top securities cop will get to the bottom of it … at least, that’s how it’s supposed to work. But at a time when suspicious trading activity is mounting, the SEC is being defanged. Trump earlier this year signed an executive order to “rein in” independent regulators, including the SEC, and make them accountable to the administration. The order forces the agency to report to the White House for approval.
At the same time, thanks to buyout and retirement programs offered by the administration, the SEC workforce is being slashed. SEC divisions reportedly lost up to 19% of their staff over a period of just several weeks. The fox isn’t just in the henhouse — now he is the farmer.
And don’t expect a strongly worded letter from Senators Chuck Schumer and Elizabeth Warren to light a fire under Atkins, the pro-business crypto enthusiast Trump picked to head the SEC. You can bet Atkins will take a lighter regulatory approach than his predecessor, Gary Gensler.
Insider trading has long been a scourge. James B. Stewart chronicled the 1980s insider trading scandals in his book Den of Thieves. Sheelah Kolhatkar’s 2017 book, Black Edge, tells the story of billionaire hedge fund investor Steven A. Cohen, his former firm, SAC Capital Advisors, and the largest insider trading investigation in history. SAC pleaded guilty in 2013 to fraud charges and agreed to pay a record $1.2 billion penalty. While Cohen wasn’t charged, he agreed to a two-year ban on managing outside money. In 2014, his firm was reborn as Point72. Six years later, he bought the New York Mets.
But the conditions today threaten to usher in a golden age of insider trading, inviting well-connected investors to cheat. I predict that the next set of results from the nation’s hedge fund managers will show that some of them have made a killing, raising questions about whether they’ve capitalized on insider information to achieve those gains.
The collateral damage happens to the people on the other side of these trades. They are losing fortunes. As Pulitzer Prize winner Anne Applebaum argues, American policy is “being transformed, not to benefit Americans but to benefit the president, his family, and his friends.”
In our conversation last month, she said that fighting corruption depends on connecting it to ordinary people’s lives, showing “they are poor because the Trump family is rich.” She noted that Alexei Navalny, the Russian opposition leader who stood up to Putin and died in a remote prison above the Arctic Circle, successfully linked Russia’s kleptocracy to bad roads and poor healthcare.
Ensuring America has a fair playing field is key to its success — that’s why we have five times Europe’s risk capital for startups. It’s why our companies garner $26 in value for every $1 dollar in profit. Russia is a kleptocracy. The total value of its stock market is around $80b, vs. $52t for the U.S. The erosion of faith has disastrous consequences. Corruption is contagious. It starts with one infected trade, spreads to cabinet members, then metastasizes through Congress and the donor class. America under Trump hasn’t just caught the disease — it’s becoming a superspreader event that will infect global capitalism.
Mean girls breaking up makes for good reality TV, but it’s a misdirect from the grift that will reduce our prosperity and limit our ability to protect others at home and abroad.
Life is so rich,
P.S. I’m sitting down with Microsoft’s chief scientist, Jaime Teevan, to discuss the topic on everyone’s minds: AI’s impact on our jobs. RSVP to AI and the Future of Work for free. Hosted by Section.
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2025-05-30 22:18:19
Last week, the fiscal lunatics proved they are still running the asylum. The last fit of congressional sanity broke out during the Clinton administration. This week, House Republicans sent the Senate a budget that adds $3.8 trillion to the deficit. Trump’s “Big Beautiful Bill” pairs unfunded tax cuts for the wealthy with a combined $1.1 trillion reduction in spending on programs including Medicaid and SNAP. The math isn’t mathing: Older/wealthier Americans are running up younger/poorer Americans’ credit cards to maintain their lifestyle. One especially offensive provision: a permanent increase in the estate tax exemption to an inflation-indexed $15 million, per person — letting couples pass $30 million to their heirs tax-free while slashing food stamps.
The budget’s fastest-growing line item isn’t defense, or healthcare, but the interest on our debt. Even if this $3.7 trillion middle finger to future generations doesn’t pass, net interest payments on the debt will total $13.8 trillion over the next decade. We’re basically cosigning a subprime mortgage for our grandchildren while giving the wealthy a trust fund top-off.
As interest payments increase, they crowd out any discretionary spending critical for growth (e.g., the internet, medical research, education), and curb our ability to respond to future crises. Nations typically aren’t conquered but go broke. According to historian Niall Ferguson, there’s a redline where debt service exceeds defense spending. In fiscal year 2024, we hit it. The federal budget earmarked $877 billion for defense and $878 billion to pay the interest on our debt. As Ferguson wrote, “America’s fiscal position is far more constrained today than ever before,” adding that the U.S. faces a debt crisis similar to the ones that contributed to the downfalls of the Spanish, French, and British empires. We’re now spending more to service rich people’s tax cuts than to defend the country. So, raise taxes or cut spending? The answer is yes. Note: Both parties engage in this consensual hallucination — taxes went down during the Biden administration and spending (YTD) has gone up under Trump.
The oldest Baby Boomers turn 79 this year. Despite medical advances, exercise, better nutrition, and an industry devoted to anti-aging, biology remains undefeated. Delusions aside, nobody is getting out of here alive or taking anything with them. History’s greatest generational wealth transfer is underway. One research firm projects that the wealth transferred through 2048 will total $124 trillion. That inheritance tsunami won’t be evenly distributed. The 2% of American households that are considered high-net-worth and ultra-high-net-worth are expected to pass half of that ($62 trillion) to their heirs. The majority of Americans won’t see any wealth transfer, however, as only 1 in 5 American households inherits anything at all.
Thirty years ago, pollster Frank Luntz argued that Republicans should rebrand the estate tax as the “death tax,” advising GOP lawmakers to hold press conferences at local mortuaries. It worked. Here’s the con: Americans fear a tax that affects fewer than 1 in 1,000 estates while cheering cuts to programs they actually use.
Smart taxation policy raises revenue with the least collateral damage. This is the foundation of a progressive tax policy: Levying the highest rates on the poor would create massive anxiety and unrest among the most vulnerable. With an estate tax, the collateral damage is small, but the rhetorical damage is significant. Americans understandably recoil at the idea of a “death tax,” even though the vast majority of them are not subject to it. Americans’ optimism can be a policy weakness, as we idolize the wealthy, believing one day we may enjoy their asymmetrical advantage. What we’re taxing, however, isn’t an estate but dynastic wealth. For too long, the death tax misdirect has obscured an elegant (see above: little collateral damage) solution.
Critics argue that the estate tax amounts to double taxation. I’m sympathetic, but only to a point, as unrealized capital gains account for 55% of the value of the wealthiest estates, meaning the wealthy are essentially avoiding nearly all taxes. In addition, the cartoon of the family store or farm being put out of business falls flat: Fewer than 100 family businesses per year owe any estate tax. In 2023 the estate tax generated $24 billion in revenue. Speaking to Bloomberg, former Treasury Secretary Lawrence Summers observed that an estimated “$2.5 trillion passing, and the vast majority of that being among 5% or 1% of the people who die, and only collecting 1% of it in taxes? I do think we can do better.” The current plan, however, is to do worse. It’s estimated that the Big Beautiful Bill’s estate tax provision will cost the government more than $200 billion in lost revenue over the next decade, or nearly two-thirds of the projected cuts to SNAP. We’re literally taking food from poor kids to give rich kids bigger trust funds.
My proposal: The U.S. should drop its exemption to $1 million and tax inheritances above that threshold at 40%, without loopholes. According to Brookings, that would raise an estimated $118 billion in annual revenue, or more than $1 trillion over a decade — enough to cover proposed cuts to Medicaid and SNAP. The cost to the families that pay the estate tax? Wealthy kids would no longer be as wealthy, but they’d still be wealthy.
I believe wealthy people have the right to transfer economic security to their descendants. But there’s no free lunch, and an inheritance can become an albatross. As William K. Vanderbilt, a descendant of Cornelius Vanderbilt, explained, inheritance is “as certain a death to ambition as cocaine is to morality.”
Still, the third-generation curse makes for good drama. (See: HBO’s Succession.) And anecdotally, the fear of the curse is real. Case in point: Paramount. Just before a deal to sell the company was announced, my Markets co-host Ed Elson asked, “Is there anything more American than the children of three billionaires — Shari Redstone, David Ellison, and Edgar Bronfman Jr. — vying for control of a failed Hollywood studio?”
In 2010, Daniel Kahneman and another Nobel winner, Angus Deaton, published a study which appeared to show that income was strongly correlated with happiness at low income levels, but that earning more than $75,000 had no impact on happiness. Later, another academic at Wharton, Matt Killingsworth, challenged that finding. Working together, along with a third academic neutral to the dispute, Kahneman and Killingsworth found that the original study had measured the decrease in unhappiness but hadn’t captured the upside high-income people enjoyed. When more carefully measured, happiness continued rising with income. However, there were dramatically diminishing returns. There were real gains to happiness in moving from $100,000 in income to $200,000, but to see that same gain again required another doubling of income, to $400,000. Extend the curve, and it flattens further.
I believe this finding should influence tax policy. A more progressive tax code that levies inherited wealth is a net positive: It raises revenue; holds happiness steady; and motivates the most privileged to strive. As I’ve said many times, greatness is in the agency of others. Most people work their entire life to achieve economic security for their family. Those who receive that security as a birthright owe it to themselves, their families, and society to transform unearned privilege into earned purpose. There is no tax that’s not taxing. But estate taxes come close.
Growing up, I was the kid being raised by a single mom who didn’t have money. I was reminded of this when my friends bolted from our newly integrated public school (Emerson) for a private school (Windward). I was left behind, wearing fake top-siders (real Sperrys cost $32) and being devastated when I lost the Vuarnets my mom had given me for Christmas. But this isn’t a sob story. We were never hungry or afraid, and being the kid who was always late on his fraternity bill ignited embers of desire and grit that have served me well. Also, now that I have some money, I just plain enjoy it more than people born with it.
As I get older, I drink more but am also more sober. In fits of sobriety I recognize a lot of my success is not my fault. (Note: I am not humble, but among my many skills is basic pattern recognition.) No one thing, but an amalgam of blessings: being born in America a white, heterosexual male in the sixties; having a mother irrationally passionate about my well-being; benefiting from government-funded technologies (e.g., the internet, GPS); beginning my career in a risk-aggressive, entrepreneurial culture; having access to deep pools of capital; and getting admitted to the University of California. That affordable and accessible higher education, funded by California taxpayers, illuminated a path of upward prosperity. Key to my ability to access this path was affirmative action, specifically Pell Grants.
The GOP’s small-minded, ugly bill would cut Pell Grants by $67 billion through 2034, reducing grants to low-income students by more than one-fifth from 2027 through 2034. More than half of Pell students would have their aid reduced in some way. The math is simple: My kids inheriting a few million less so we can offer millions wider paths to education, jobs, wealth, and more tax revenue is a no-brainer trade-off. The whole point of, and reward from, prosperity is to protect. As the Greek proverb says, “A society grows great when old men plant trees whose shade they know they shall never sit in.” My generation is full of old men who are in the business of clear-cutting. It needs to stop.
Life is so rich,
P.S. The Prof G Markets Pod now has a newsletter edition. Sign up here to receive it every Monday. You can thank me later.
The post Rich Kids appeared first on No Mercy / No Malice.
2025-05-23 23:16:24
The 0.1% have insulated themselves from the general public with their own schools, health care, transportation, security, and justice system. The members of this rarefied class are unfazed by the chaos unfolding outside their gated properties. They’re indifferent to Roe v. Wade’s demise, immigration roundups, and rising prices at Walmart. If a family member has an unwanted pregnancy or mobs arrive with pitchforks, they’ll always have access to mifepristone and residency in Dubai, London, or Milan. They’re invested in hedge funds and fine art, not in the future of America. With the means to hire shrewd defense attorneys and aggressive PR firms that weaponize social media bots, the superrich are protected by the law, but not bound by it. The lower 99% are bound by the law, but not protected by it.
Living in their bubble, the extremely rich express shock and horror, but opt not to rock the $300 million boat. Along with prominent Republicans, Democrats, and corporate CEOs, they’re brothers in the disarmament … of our democracy. They’re forging an unholy alliance, tolerating the descent into kleptocracy and the slow burn toward fascism. If the heat pierces the shields they’ve erected, these Transnational Oligarchs, or Toligarchs, as I’ve labeled them, can grab their bags, write a check, and purchase a “golden visa” to Greece or Portugal.
With vast wealth comes enormous influence. Money is a proxy for power. The top 0.1% have more than five times as much wealth as the bottom 50%. Just 100 billionaire families invested a record $2.6 billion in federal elections last year, 1 of every 6 dollars spent overall. These wealthy individuals could galvanize politicians and push back against policies that undermine American values, but they’re largely quiet. When you fail to speak out against threats to democracy, equality, and the rule of law, you turn your back on the people and country that elevated you to the iron throne of prosperity. Even the Lannisters always paid their debts.
There’s a clear pattern: As wealth concentrates, political spending capacity increases, which secures policy outcomes that further concentrate wealth, creating a self-reinforcing cycle that undermines democratic equality. The most dramatic acceleration of this trend occurred after Citizens United, the 2010 Supreme Court ruling that opened the doors to unlimited spending on American elections.
Consider the following stats:
In sum, as wealth inequality gets worse … it gets (even) worse.
In his first 100 days as president in 1933, Franklin D. Roosevelt moved swiftly to lift the country out of the Great Depression, building the foundation for his New Deal. As historians have observed, he had another objective: to prove democracy works. But the president’s programs sparked criticism from rich Americans, who regarded him as a traitor to his class. A powerful group, including the DuPonts, the founders of General Motors, and assorted oil millionaires, launched the American Liberty League to fight back.
Today we again need some bold class traitors to address America’s worsening inequalities. Over the past two decades, the top 0.1% of American households have seen their share of the country’s wealth rise from about 10% to 14%, according to Federal Reserve data. During the same period, the bottom 50% of Americans have watched their stake go from about 2.5% to …. 2.5%. More than $22 trillion (and counting) is in the hands of the 0.1%, while just $4 trillion is spread out across the bottom half of the country.
New data last month showed that $1 trillion of wealth — more than the value of Switzerland’s economy — was created for the 19 richest American households in 2024. It would take 726,000 years for 10 typical American workers to earn the $365 billion the country’s 10 richest billionaires made in the past 12 months.
The rapidly-expanding class of Toligarchs remains silent. Not because they’re content with the disorder, disruption, and erosion of American values, but because they continue to get richer. They lack the courage to make any noise, and their rights are largely portable. And the gap would only widen with Trump’s “big, beautiful” tax bill, which would take from the poor and give to the rich. The top 0.1% on average would reportedly gain more than $389,000 in after-tax income in 2026.
Just a few decades ago, when the rich felt more invested in America, such stats would have triggered a greater outcry. However, things have changed. Rather than using its platform to strengthen America, the country’s aristocracy is focusing more on its exit strategy if shit gets real. When the wealthiest 0.1% talk about diversification today, there’s a good chance they’re thinking about passports, not private equity.
One part of the escape plan are those golden visas, which allow foreigners to live and work in another country by making a large investment — starting at around $280,000 and stretching into the millions — and often offer a path to a second passport. Among the most attractive destinations are Greece, Italy, Malta, Panama, Portugal, and Thailand. One investment migration adviser (no doubt a growing business) said in January that it had registered a 1,000% increase in interest in second residencies and citizenships over the past five years. Bloomberg has chronicled how rich Americans are “flex-working” on the French Riviera, preparing to “swoop in” if New Zealand relaxes its ban on foreigners buying homes, and “flocking to Spain,” despite the end of its golden visa.
In Britain, meanwhile, record numbers of Americans applied for citizenship in 2024, especially in the months leading up to the start of President Trump’s term. The surge in interest in getting another passport was attributed to the president’s reelection bid and victory in November, as well as tax changes in the U.K. that have pushed rich Americans to obtain British passports before they leave the country.
The number of Americans buying prime London real estate in Knightsbridge, Mayfair, and other expensive neighborhoods surpassed Chinese purchasers for the first time last year. A story in the Guardian earlier this month quoted a chef and business owner in the Cotswolds saying the region was becoming the “Hamptons of England.”
Globally, a record 135,000 millionaires are projected to migrate to a new country this year. In the U.K., where I’ve been living for a few years, not a day goes by without a story about millionaires fleeing the country in search of lower-tax jurisdictions or greater economic stability. A record number of British citizens have applied for Irish passports, five years post-Brexit, as they strive to gain “backdoor” access to the European Union.
At the same time, the U.S. is hoping to attract Toligarchs moving in the opposite direction. While America carries out a wave of arrests and visa revocations of students, it’s moving forward with a new “gold card” visa program that could lead to permanent residency for wealthy individuals who are willing to pay a fee of about $5 million. Anybody who is willing (i.e., needs to) pay $5 million for a visa to a Western country is not moving but fleeing.
American prosperity and rights blessed me with the opportunity to move to the U.K. These included access to family planning that staved off poverty for my single mom; the free and accessible education I got at UCLA/Berkeley, thanks to affirmative action programs (i.e., Pell Grants); and the country’s culture of entrepreneurship. The U.S. also offered the rule of law and consistency, which created the deepest pools of capital in the world (I’ve raised close to $1b for my startups and projects), an unrivaled talent pool of citizens and the best and brightest from abroad (immigrants), numerous European and Asian clients who enjoyed working with “the good guys” (Americans), and sane fiscal management that enabled massive investments in the technologies that have made me and hundreds of my colleagues wealthy. Those factors opened many doors for my family, including this one allowing me to cross the Atlantic for a spell.
This is not a time to plan an exit, or stay abroad, but to return home.
When I head back next year, I’ll use my voice and proximity to money and power to push for change to Make America America Again. And BTW, for those suffering from TDS (Trump devotion syndrome), hope is on the way. EBA (evidence-based analysis) or BPR (basic pattern recognition) should eventually pry people away from the criminality and stupidity of this administration.
For now, the Toligarchs are aligned with Fortune 500 CEOs, who privately believe the country is on a dangerous course but publicly cower. Just as the first corporate titans to stand up for what’s right will reap reputational and commercial rewards, Toligarch class traitors will earn a place in the history books as American patriots. At a minimum, if your blessings have not translated into the courage and obligation to use your power and platform to publicly voice concern, then do us all a favor and privately shut the fuck up.
Life is so rich,
The post Rise of the Toligarchs appeared first on No Mercy / No Malice.
2025-05-16 23:35:31
This week, President Trump signed an executive order to lower drug prices, demanding the U.S. receive most favored nation status from pharmaceutical companies — that they charge Americans the lowest price paid abroad. Trump said his policy would cut drug prices by 59%: “Whoever is paying the lowest price, that’s the price that we’re going to get.” One issue though: It’s bullshit. Pharma stocks fell initially, but they more than recovered once the market realized the executive “order” is voluntary. The markets saw the order as a Mack Truck sees an insect — barely. The announcement is laughable when set against the regulatory capture of the U.S. healthcare industry.
In the Wall Street Journal, historian Niall Ferguson wrote, “any great power that spends more on debt service than on defense risks ceasing to be a great power.” Sooner or later, the interest on the debt crowds out a nation’s capacity to do anything else — fight wars, survive pandemics, build infrastructure, fund social safety nets, etc. In fiscal year 2024, the federal budget earmarked $877 billion for defense and $878 billion to pay the interest on our debt. As Ferguson explained, “America’s fiscal position is far more constrained today than ever before.” In fact, he argued, we’re facing a debt crisis similar to the ones that contributed to the downfalls of the Spanish, French, and British empires. As I previously wrote, countries typically are not conquered — they go broke. America is up against it.
Reigning in our debt should be a national priority, but it isn’t. Congressional Republicans are working to make Trump’s tax cuts permanent, which would add $9 trillion to the debt — 3x the national debt of Germany. During the campaign, Elon Musk said he’d cut $2 trillion from the federal budget. More recently, DOGE claimed to have saved $160 billion, but a nonpartisan analysis determined those cuts came at a cost of $135 billion, netting savings of $25 billion. The GOP refuses to acknowledge math and believes the nation will grow if we cut taxes to zero. Meanwhile, nearly all Democrats oppose entitlement cuts, and most also oppose cutting defense spending, believing instead that we can tax our way out of debt. This bipartisan Kabuki dance is juvenile. Just as parents tell themselves their kid “doesn’t need college in today’s world,” we’ve decided there is a free lunch, governments with their own reserve currency don’t risk default, and we’re not headed toward a cliff.
Modern Monetary Theory is the latest consensual hallucination between policymakers who want to excuse their past behavior and those who want an excuse to spend more. They believe a perpetual motion machine does exist. Spoiler alert: It doesn’t. I received a degree in economics (weak flex, as I graduated with a 2.27), taught macro- and microeconomics in grad school (better flex), worked in fixed income for Morgan Stanley (getting weaker again), and have written several books on economics and finance (you decide). It’s dangerous to be certain, and I’m not an economist. But I am … certain that MMT is fucking stupid, and any economist espousing this intellectual traif makes RFK Jr. seem like Jonas Salk.
Anyway, when the adults show up we should have a serious sit-down re closing the fiscal gap — the amount the government needs to raise taxes and / or cut spending, as a share of GDP, to stabilize our fiscal health. The Treasury estimates the current fiscal gap is 4.3% of GDP. Stanley Druckenmiller, famous for betting against the British pound and delivering 30% annual returns over three decades, puts the gap at 7.7%.
U.S. debt-to-GDP currently stands at 120%, with the CBO projecting it could rise to 160% by the 2050s. But in a presentation that should be required viewing for Congress, Oakcliff Capital CEO Bryan Lawrence points out that the CBO projections include a number of unrealistic assumptions: no recessions, no wars, no pandemics, 4% interest on Treasuries, 2% inflation, a birth rate of 1.9, the addition of 1.9 million immigrants per year, and Trump’s tax cuts expiring. What we should focus on, Lawrence argues, is the 2% real growth in healthcare costs per capita. A 1 percentage point reduction in the growth of healthcare costs per capita translates to 3% of GDP. According to Lawrence, that gets us halfway to our goal of eliminating the fiscal gap, which he estimates to be 6% of GDP. In sum, reducing healthcare costs isn’t the best option, it’s the only option.
Every election cycle, candidates tell Americans their healthcare system is expensive and broken. Yes, Americans know this. Incomprehensible insurance bills, medical and dental debt haunting 40% of U.S. households, and trips to Canada or Mexico for cheaper prescription drugs have turned our healthcare system into one of our biggest sources of emotional distress. U.S. healthcare is a $4.9t corrupt cop. In a report that looked at costs and outcomes across 10 industrialized nations, researchers at the Commonwealth Fund wrote, “The U.S. continues to be in a class by itself in the underperformance of its healthcare sector.” For those in the back of the class, that’s the wrong kind of exceptionalism.
According to the most recent data, the U.S. spends $13,432 per capita on healthcare — more than twice what the average comparable nation spends. We pay 8x what Germany and Switzerland pay for Ozempic and 7x what they pay for Humira. Insulin, which has been in mass production since the 1930s, costs 8x more in the U.S. than it does in Greece. The median cost of a coronary bypass in the U.S. is $89,000, approximately 8x and 5x what the procedure costs in Spain and Australia, respectively. In the U.S. a childbirth with a C-section costs 4x what it does in South Africa. An appendectomy in the U.S. costs 3x what it does in the U.K. For what we spend, we should be the healthiest nation among our peers. We aren’t; we pay significantly more for dramatically poorer outcomes.
This week, House Republicans floated $880 billion in Medicaid cuts over the next decade to help pay for Trump’s $4.5 trillion tax cut. Even by Washington standards, the math doesn’t math. But considering the GOP’s slim Congressional majority and the political fallout from throwing an estimated 8 million people off the health insurance rolls, the proposal likely won’t go anywhere. These aren’t serious people.
A serious person would ask a simple question: Where does the money the U.S. spends in excess of what other nations spend on healthcare go? Answer: 30% of it goes to administrative costs, split evenly between providers and insurers. Another 10% goes to prescription drugs. Higher salaries for U.S. doctors and nurses and investments in medical equipment account for the rest.
There’s no silver bullet to lowering costs, but Bryan Lawrence identified our two most powerful tools: Pricing transparency and negotiating prescription drug costs. The 2022 Inflation Reduction Act (worst name ever) granted Medicare the power, for the first time, to negotiate drug prices. Based on a complicated formula, Health and Human Services selected 10 drugs covered under Medicare Part D. The discounts range from 38% to 79%. When these prices take effect next year, Medicare will save an estimated $6 billion, and Medicare beneficiaries will save $1.5 billion in out-of-pocket costs. In the final days of the administration, Biden’s HHS secretary announced another 15 drugs, including Ozempic, would be eligible for Medicare negotiation. Q: Why isn’t the largest purchaser of pharmaceuticals on the planet able to negotiate costs — like everyone else — on all drugs? A: Fuck if I know.
The insurance industrial complex imprints two ideas into the zeitgeist. First, you’re irresponsible if you don’t have health insurance. Second, the best companies offer employees gold-plated plans as a point of differentiation. As an entrepreneur, I noticed that my firm’s health insurance premiums increased by two or four points above inflation every year. Those costs were effectively nonnegotiable, so when I had the means to do so, I went naked, saving my family $50,000 per year in premiums. Note: I’m not suggesting you do this — I’m fortunate to be able to absorb any healthcare costs.
Total U.S. healthcare expenditures were $4.9 trillion in 2023. Think about the previous sentence: The U.S. healthcare industrial complex is bigger than the entire German economy. Private businesses accounted for 18% of total expenditures, with three-quarters of that money going toward insurance premiums. American households, two-thirds of which have employer-sponsored plans, picked up another 27% of total expenditures via employee contributions to premiums, co-pays, and out-of-pocket expenses. In a functioning market, consumers would allocate their dollars toward lower costs and better outcomes. In the U.S. healthcare market, however, consumers are left in the dark while insurers and providers maximize profits.
More than 90% of Americans support greater healthcare price transparency. I don’t know what the other 10% of Americans are thinking, but I do know that roughly the same share of Americans work in healthcare. Probably just a coincidence. Injecting price transparency into healthcare could save an estimated $1 trillion annually, as employers and consumers could harness the power of markets to lower costs and inspire better outcomes. Senate Republicans, Democrats, and even the chamber’s lone socialist support the Health Care PRICE Transparency Act 2.0. So why hasn’t it become law? Because money is speech, and the healthcare industry and its lobbyists have told Congress, “Give us America’s wallet, or we will fucking kill you (get you booted out of office).”
In 2024, U.S. businesses spent $4.4 billion on lobbying. It may be the greatest ROI in economic history. One study found that lobbying connected to a 2004 law that created a one-time tax holiday for repatriated profits delivered a 22,000% return. In 2013, Amgen spent $5 million lobbying Congress for a two-year reprieve from Medicare price controls on a single drug. That effort resulted in $500 million of Medicare payments to Amgen. No other industry embodies regulatory capture like the healthcare industrial complex.
I’m watching Season 2 of Andor. It’s the best television show so far in the Star Wars franchise, but even if the Force isn’t strong with you, Andor is an illuminating case study in how revolutions begin. When we meet Cassian Andor, he’s a petty thief, but as the Empire steps up pressure across the galaxy, our hero and others like him evolve into revolutionaries.
Luigi Mangione, who allegedly murdered a health insurance CEO, isn’t a revolutionary, but he’s become a folk hero. His crowd-funded legal defense fund recently topped $1 million, with an average donation of $20. That a murderer would be seen as a hero is depraved — and revealing. Given everything America has lived through — deindustrialization, two forever wars in the Middle East, the Great Recession, an opioid epidemic, the highest per capita pandemic death rate among comparable industrialized nations, the largest generational wealth transfer in history, and millions of young men failing to launch — it’s not surprising that voters chose a felon who promised that he alone could fix it. He can’t, but if we don’t fix it, the wealth inequality at the root of America’s pain will self-correct via war, famine, or revolution.
A story that haunts me: For the first time, the New York Times announced the wedding of a young couple who weren’t legally getting married — just having a ceremony. The bride was suffering from terminal brain cancer and didn’t want her husband to inherit her medical debt when she died. We live in the most prosperous nation in history. We shouldn’t be asking our kids to borrow money to support their parents’ and grandparents’ lifestyle. And our daughters, every one, should be able to get married.
Life is so rich,
P.S. Did you know I have another newsletter? The Prof G Markets Pod now has a newsletter edition. Sign up here to receive it every Monday. What a thrill.
The post The Fix appeared first on No Mercy / No Malice.
2025-05-09 23:16:49
The Manhattan Project, the top-secret U.S. government initiative to build an atomic bomb before Nazi Germany did, relied on hundreds of brilliant scientists from leading universities. Many of them had fled fascist regimes in Europe and found refuge on American campuses, including Berkeley, Columbia, MIT, Princeton, Purdue, and the University of Minnesota. In the end, Adolf Hitler didn’t come close to developing a bomb. But if the rivers of talent had flowed in the opposite direction, the world would look dramatically different today.
In the eight decades since World War II, collaboration among the federal government, academia, and industry has unleashed unprecedented prosperity and economic growth for America. No other country has been as successful. Consider the list of the 10 most valuable companies in the world. Eight are based in the U.S. Research funded by the federal government has paved the way for a long list of breakthroughs, from the internet to GPS to mRNA vaccines to Apple’s Siri.
Yet rather than building on this foundation, the White House is determined to destroy it. The administration is attacking science and slashing research funding at universities under the false flag of fighting antisemitism. The demands are more thought control than civil rights. An assault on progressive ideology vs. bigotry. The results could be devastating: The river of knowledge may flow in reverse. Loath to get in the way of an adversary making a mistake, global competitors are eagerly shopping at the greatest yard sale of human capital since German scientists bolted for America in World War II.
Soon, China won’t need to engage in theft of U.S. intellectual property. It will become the primary source. After the White House in March moved forward with plans to lay off thousands of researchers from leading U.S. facilities, including the Centers for Disease Control and Prevention, the National Institutes of Health, and the National Oceanic and Atmospheric Administration, Chinese recruiters jumped on social media to tout career opportunities in Shenzhen.
The Boston area is home to Kendall Square, which may be the most innovative square mile on the planet, and boasts universities including Harvard, MIT, and Tufts. In March, a Turkish doctoral student was arrested by masked federal agents, a year after she co-wrote an op-ed criticizing the school’s response to Israel’s war in Gaza. The governor of Massachusetts, Maura Healey, said: “China is on our campuses right now” recruiting scientists and faculty members. “That makes America less safe, less competitive, and has tremendous ripple effects for our economy.”
By many measures, China is already a scientific superpower. In other areas, it’s gaining ground quickly. The number of universities in China and Hong Kong ranked in the top 100 doubled to 12 over the past five years, while the number of American universities slipped to 38 from 40, according to the annual Times Higher Education list of more than 2,000 institutions. A different ranking of the top 500 showed that the number of Chinese universities tripled between 2010 and 2020, amid a slump for U.S. institutions.
Departures of Chinese scientists from the U.S. have also been accelerating, fueled by a 2018 program that sought to curb Chinese espionage. Although the Trump-era “China Initiative” was shut down four years later, reports of high-profile scientists of Chinese origin returning to China in recent months have raised concern. I believe there are likely numerous Chinese nationals who are spies, and … it’s worth it.
Imagine a football team that receives not one, but 31 of the 32 first-round draft picks. Every year. Now imagine the owner harasses the rookie quarterback, cleans out his locker, and threatens to have him and his family arrested and deported, sending a chill through the ranks of promising college players.
That would be … not smart.
This is what the White House is doing. When you hear the term brain drain, you think of America as the primary beneficiary. The country has long been the envy of the world when it comes to attracting talent. But we can no longer take this status for granted. Last week, we wrote about the rivers of financial capital reversing and flowing away from the U.S. But the change in direction of human capital may be even more important. In a March poll by the journal Nature, more than 1,200 American scientists — three-quarters of the respondents — said they were considering leaving America. The journal’s job-search platform saw 32% more applications for positions overseas from January through March 2025 vs. a year prior.
European leaders aren’t wasting any time in exploiting America’s dramatic research cuts, restrictions on academic freedom, and funding freezes. The European Commission’s president, Ursula von der Leyen, earlier this week announced an investment of €500 million to woo international researchers, highlighting the EU’s values of freedom, openness, collaboration, and diversity. Without directly mentioning Trump, she said that undermining science and research is a “gigantic miscalculation.”
French President Emmanuel Macron, who joined von der Leyen at Sorbonne University in Paris, said his country would commit another €100 million to attract scholars and make Europe a “safe haven” for science. Macron said: “No one could have thought that one of the largest democracies in the world would erase, with a stroke of the pen, the ability to grant visas to certain researchers. No one could have thought that this great democracy, whose economic model relies so heavily on free science, on innovation, and on its ability to innovate more than Europeans … would make such a mistake.”
Many other countries see an opening, too. In the U.K., the Financial Times reported that the government is considering a £50 million program to court researchers, while Australia, Canada, the Netherlands, and Norway are progressing with their own plans. Regions within nations are jumping in as well: Catalan President Salvador Illa unveiled a €30 million effort — the “Catalonia Talent Bridge” — to finance posts for more than 70 American researchers facing restrictions to their academic freedom.
At my own institution, NYU Stern School of Business, I’ve seen firsthand the talent the rest of the world is racing to attract. The brightest scholars from the Indian Institutes of Science and other universities pace the halls of Stern. In sum, they dominate: exceptional scholars, teachers, and (American) patriots. To think that the U.S. is shutting off the tap — it isn’t just depressing, it’s fucking stupid.
Even if the White House is sparing artificial intelligence and quantum research from its slash-and-burn strategy, it has requested cutting the $9 billion budget of the National Science Foundation by more than half. The government agency, a major funder of basic science, math, and engineering, especially at universities across the country, terminated more than 1,000 active grants over a two-week period.
Waging war on universities and reducing federal funding for scientific research will weaken America’s economic competitiveness. Economists at American University found that a 25% cut to public R&D spending would cut gross domestic product by 3.8%. That’s comparable to the decline seen during the Great Recession, which ended in 2009. A 50% reduction in funding would lower GDP by almost 7.6%, making Americans much poorer.
The U.S. can’t rely on the private sector to replace the government in funding science. No corporation can match the Defense Advanced Research Projects Agency, or Darpa, which has played a critical role as an engine of American innovation. Early-stage research is risky and requires massive capital — and patience — investments companies focused on quarterly earnings can’t justify. Prosperous nations play the long game. The world’s most valuable firms have one thing in common: They were built on technology financed by American taxpayers via public-private partnerships — government and universities.
They also excel at bringing the government, universities, and companies together. J. Robert Oppenheimer, the Berkeley and Caltech scientist and “father of the atomic bomb” and General Leslie Groves were crucial Manhattan Project players, as everyone knows thanks to the performances of Cillian Murphy and Matt Damon in the Oscar-winning film Oppenheimer. But hundreds of others — and dozens of companies, too — played supporting roles. As physicist Niels Bohr said in 1944, the government wouldn’t have succeeded without “turning the whole country into a factory.”
It was fear of Adolf Hitler getting a bomb that drove Franklin D. Roosevelt to launch the Manhattan Project. But it was hope that spurred the president to write to Vannevar Bush, head of the Office of Scientific Research and Development, in November 1944. Roosevelt asked Bush to come up with a set of policy recommendations to sustain America’s wartime innovation during peacetime.
America’s innovation supremacy wasn’t an accident or birthright — it was earned through deliberate investment and intense collaboration among the world’s most exceptional minds. Now we risk throwing it all away. We’ve spent 80 years building a nearly unassailable lead, only to suddenly decide the race is optional. Our universities still dominate global rankings and our tech firms command unprecedented market power, but we’re actively dismantling the foundation that made it all possible. I believe America is being run by a mob family. That’s bad. What’s worse is that Michael Corleone is running the grift, and Fredo is running the government. America has become the textbook definition of snatching defeat from the jaws of victory. I was in Hamburg last week presenting at the OMR Festival (Online Marketing Rockstars), and the general vibe is bewilderment: How could a superpower be this stupid?
Life is so rich,
P.S. I enjoyed my conversation with Anne Applebaum, a Pulitzer Prize–winning historian and staff writer at the Atlantic, about the rise of kleptocracy in America. Listen here on Apple or here on Spotify, or watch it here on YouTube.
The post Brain Drain appeared first on No Mercy / No Malice.
2025-05-02 23:22:16
“Stay in your lane” is a person’s way of saying they disagree with you, but they’re too lazy to counter your point(s) with any evidence or argument. I get this a lot when I talk about politics. Separating business from politics is akin to believing that fish swim independent of the water’s current. America’s toxic uncertainty is urging capital to look elsewhere.
The world’s biggest yard sale is taking place now that brand America is sick, and the world is on the front lawn hoping to pick up $26t in economic activity on the cheap. Capital flows into EU index funds and institutional interest in investing in the U.S. are at 30-year highs and lows, respectively. As such, I believe Europe and China represent investment opportunities. Since the fourth quarter of 2024, I’ve been reallocating capital out of the U.S.
(Note: This post isn’t investment advice.)
The Amazon River flows eastward across South America for 6,400 kilometers before it empties into the Atlantic. But 65 million years ago — a blink of the eye in geological time — the Amazon flowed in the opposite direction, toward the Pacific. Tidal rivers reverse their flow daily. Others reverse their flow annually as seasons change. Three times this century, the Mississippi reversed its flow during hurricane storm surges. In 1900 civil engineers reversed the flow of the Chicago River, changing its outlet from Lake Michigan to the Mississippi.
Capital flows also shift cyclically and as a result of human intervention. Unlike rivers, shifts in capital flows can be sudden and violent, as capital does not pledge allegiance, but moves aggressively toward safety and opportunity. In the most recent Bank of America fund manager’s survey, the allocation to U.S. equities fell to a net 36% underweight. That represents a 53-percentage-point swing in the U.S. equity weighting since February — the biggest two-month decline on record. In the same survey, 73% of fund managers said they believed U.S. exceptionalism had peaked. What began as a cyclical movement in capital akin to a river’s seasonal change in direction now resembles a transformation on the scale of the Amazon’s ancient rerouting — though this shift was engineered and accelerated by humans, like the redirection of the Chicago River.
Heading into the recent NFL draft, Shedeur Sanders, the University of Colorado quarterback and son of NFL hall of famer Deion Sanders, was considered a likely first round pick. As it turned out, he was the 144th overall pick in the fifth round, costing him an estimated $40 million. I don’t know what Deion told his son afterward, but here’s what I’d tell mine: You’re better than your worst moments, but never as good as your best ones. This regression to the mean is one of the most powerful forces in the world. Also, Deion should tell his son to tell his dad to shut the fuck up.
Over the past decade, U.S. equities have delivered an extraordinary 14.8% annualized return, outpacing global ex-U.S. equities (7.0%) and Eurozone equities (7.8%). After a historic bull run, it’s tempting to believe American exceptionalism is a permanent feature, like gravity. Since 1975, however, the outperformance cycle for U.S. vs. international equities has lasted eight years on average. At the end of 2024, the U.S. was 13.8 years into the most recent one. U.S. equities are regressing to the mean.
Eleven months into the pandemic, Warren Buffett wrote in his annual shareholder letter, “Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.” This statement was based on a set of assumptions that our checks and balances protected the U.S. engines of growth (risk aggressiveness, rule of law, IP, university research, attracting premier human capital). Over the past 100 days it appears we’ve taken these things for granted, and I now believe it makes sense to bet on other regions. Over the long run, I’m bullish on America, as there’s no better platform for unleashing human potential. The question isn’t whether to bet against America, however, but at what valuation? BTW, if a human was engineered to be the polar opposite of Warren Buffett, they’d look strikingly similar to Peter Navarro.
During the Great Recession, I bought Apple and Amazon at around $10 to $12 per share. After 15 years and a historic bull run, I’m up around 19x to 22x. (Note: I also bought Netflix at $12, and sold at $10 — I get it wrong all the time.) The chocolate and peanut butter was the combination of great companies priced at historic discounts. Since then, the natural disruptions that bring valuations down and transfer value from incumbents to entrants have been arrested by massive stimulus (i.e., deficits) at the behest of an older generation, which is spending younger people’s money to prop up their wealth. But that’s another post. The Great Rotation isn’t as much a bet against U.S. equities, but simply the recognition that U.S. equities are overvalued relative to those of Europe and China.
The S&P 500 trades at a multiple of 26x; the STOXX Europe 600 Index trades at a multiple of 14x, and the CSI 300 trades at a multiple of 15x. When stock valuations become inflated, future returns decline. I’ve done well with my Apple and Amazon investments, but with both of them trading at multiples of 34x, I’ve begun taking profits and looking for returns elsewhere.
At the start of the year, investors were bullish on China for a few reasons: strong corporate profits, AI breakthroughs, and the apparent easing of regulatory pressure from Beijing. The trade war and fears of a global recession have dampened China’s growth forecasts. The IMF cut its GDP growth forecast for 2025 from 4.6% to 4%. But as I’ve written before, China is better positioned than the U.S. to weather the fallout from a trade war. I also believe that, over the long run, tariffs will always trend toward zero as consumers opt for cheaper goods over … everything.
Anyways, the stocks I’m looking at:
Alibaba, China’s answer to Amazon, saw its stock hit an all-time high in 2020, and since then it’s off 62%. Its co-founder, Jack Ma, disappeared from public view after criticizing financial regulators. He resurfaced in 2023, but it wasn’t until this February that President Xi blessed his return in a meeting with Chinese entrepreneurs, urging them to “show their talents.” As one China-watcher told CNBC, Xi sent a clear signal that China’s policy priorities are private sector growth and AI. Last quarter, Alibaba posted $38.5 billion in revenue — a 7.6% YoY jump and its fastest rate of increase since 2023. Net profit increased 3x YoY, coming in at $6.7 billion. Alibaba’s growth was driven by its core e-commerce businesses and the progress it’s making on its AI-powered marketing tool. The stock is up 50% YoY.
I believe Alibaba is well-positioned to continue to take advantage of the U.S.-China AI race. Alibaba’s challenge is expanding its consumer business units domestically and accelerating cloud growth (up 13% YoY this quarter). China’s household spending is less than 40% of the country’s annual economic output, 20 percentage points below the global average. Closing that delta offers a massive opportunity, and (again) China’s leaders have signaled support for Alibaba. In his annual report to parliament, Premier Li Qiang prioritized “consumption” over long-standing policies aimed at moving Chinese production up the value chain. While there’s concern that Chinese consumers may reduce spending on nonsubsidized goods, it’s worth thinking about what could go right. China may finally become a consumer economy — a transformation that would benefit Alibaba. Finally, BABA’s cloud revenue will likely register a surge as European firms shift their gaze east (away from the U.S.) for cloud services.
Starting at $8,000, the BYD Seagull has a range comparable to those of other EVs and comes standard with autonomous driving technology, and in the coming years it will receive a battery upgrade with 5-minute charging capabilities. My Pivot co-host, Kara Swisher, really wants one, but they aren’t available in the U.S. — a fact that hasn’t slowed BYD’s growth. Its first-quarter revenue jumped 36% YoY, to $23.5 billion, while its net profit doubled, to $1.26 billion. This year, BYD is on track to sell 5.5 million vehicles, including 800,000 exports and is the fastest growing brand in the UK. Meanwhile, Tesla, which registered a first-quarter sales decline of 13% YoY, trades at a multiple of 130x, vs. 20x for BYD. The Chinese company’s mission is to cool the Earth by 1 degree Celsius, and it just launched its first cargo ship.
Even before “Liberation Day,” capital inflows to European equities were at a decade-long high, suggesting the Great Rotation was already underway. The trade war has accelerated inflows, but it’s also contributing to a growing sense of European patriotism. In the first two weeks of April, U.S.-focused funds managed by Amundi, State Street, and UBS saw a combined outflow of $4.5 billion. As I previously wrote, America’s retreat from the post-war order it created could be a catalyst for the EU to harness its economic strength and finally become a true union. After Germany’s recent decision to lift its constitutional debt restrictions to boost defense spending above 2% of GDP, the bloc began discussions to encourage other member states to make similar fiscal reforms. A defense boom across the continent keeps Ukraine in the fight, but it’s also an economic stimulus for the EU.
I try to avoid helicopters. They’re noisy and smell of fuel. To me, helicopters feel flimsy and crude, like a fan stuck on a soda can with duct tape. I spend most of the journey adding up the staggering number of points of failure. Statistically, helicopters are 26x more likely to crash than commercial airplanes, and helicopter crashes are 230x more likely to result in a fatality. The upside? Helicopters are one of the few last-mile solutions at the premier choke point in travel.
I recently participated in a $50 million PIPE in a British company called Vertical Aerospace (NYSE: EVTL) that’s developing an electric flying taxi. Electric vertical takeoff and landing (eVTOL) aircraft are quieter than helicopters and emissions-free, and they have lower projected operational and maintenance costs. They may also turn out to be safer, as eVTOL aircraft use distributed propulsion systems with redundant motors and battery packs. Built for short hops with small payloads, eVTOL aircraft aren’t meant to replace helicopters, but rather create a new last-mile solution capable of delivering people, packages, and meals without having to navigate through traffic jams on the ground.
The eVTOL sector is in the process of testing and regulatory certification. The FAA is adopting new regulations, while U.K. regulators are using an existing framework for aircraft under 5,700 kg for interim operations and tailoring as they go. Also, the EU has realized that its rich uncle (Sam) has gone bat-shit crazy and can no longer be counted on for support. If the EU, per its claims, increases defense spending from 1.9% of GDP to 3%, an incremental $200 billion more will be spent on defense per annum. This, in my view, could be a turning point for EU stocks and tech firms. This wager is much riskier than betting on BABA or BYD, as the bankruptcy risk is real. The stock is off 97% from its high, and American competitors Joby and Archer trade at 10x that valuation. I see this one as rocket fuel: It’s got enormous thrust (upside), but it’s dangerous (downside).
I went to a pop-up bar last night run by the doorwomen from the recently burned down Chiltern Firehouse (#enormousfuckingbummer). I believe the universe was not comfortable with me having access (they liked me for some reason) to the best room in Europe. The natural order has been restored, and now I’m back at members’ clubs with other middle-aged men trying to fill the void in their chest with alcohol and clinging to the myth that David Beckham and Guy Ritchie also “hang out here.” Too much?
Anyway, it wasn’t about the venue, but the people in the room. And it’s the same here with VERT. I co-invested with my friend Jason Mudrick (Mudrick Capital). The previous investments he stitched me into returned 4x and 30x. So he had me at hello.
As Brand America shifts from prosperity and rights to oligarchy and corruption, I distract myself with a great American pastime: wondering how I make money here. The greatest own-goal since Brexit/Iraq/Vietnam is underway, and, as in any disruption, there is an explosion in Alpha. It’s fun and (again) helps distract me from watching the pillars that provided me with a life my immigrant parents couldn’t imagine crumble. It helps. Sort of.
Life is so rich,
This week on my Conversations pod I spoke with New York Times columnist David Brooks about the decline of true conservatism and the crisis facing men and boys. Listen on Apple or Spotify or watch on YouTube.
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