Market Volatility Ahead?

Hedge funds bet billions on market crash in Trump’s America
https://www.telegraph.co.uk/business/2025/01/31/hedge-funds-bet-billions-against-trumps-america/
Goldman Sachs reports a surge in short bets against US stocks.

The Fed Is Sitting on the Sidelines, but for How Long?
https://www.nytimes.com/2025/01/31/business/stock-market-ai-federal-reserve-immigration.html
Stocks in the United States swooned when the excellent performance of a new, relatively cheap Chinese artificial intelligence engine, DeepSeek, raised questions about the strategies of deep-pocketed American companies like Google, Microsoft, Meta and Open AI.
They have poured billions into advanced A.I. hardware and power supplies, money that has swelled the coffers of the giant chipmakers Nvidia and Broadcom as well as utilities and energy companies with nuclear power and fossil fuels. The brute force approach to developing advanced artificial intelligence may not make sense if Chinese open-source A.I. can achieve similar results at a small fraction of the cost.

DeepSeek has blown three AI myths apart
https://www.telegraph.co.uk/business/2025/01/30/deepseek-has-blown-three-ai-myths-apart/
It’s hard to let go of a familiar narrative but diversification has never been more important. 

I Study Financial Markets. The Nvidia Rout Is Only the Start.
https://www.nytimes.com/2025/01/28/opinion/nvidia-deepseek-ai-valuation-ouroboros.html
 
DeepSeek Undercuts Belief That Chip-Hungry U.S. Players Will Win AI Race
https://www.wsj.com/tech/ai/deepseek-tech-stocks-a3e83478
More AI competition will make it hard for Big Tech to generate the oligopoly-like profit margins that investors hope for. 

Steve Bannon Interview – Strange and Fascinating

Steve Bannon on ‘Broligarchs’ vs. Populism
Video Podcast: https://youtu.be/BrSLe3-OGBU?si=xyLK-XxCQvFP8zxd
Transcript:
https://www.nytimes.com/2025/01/31/opinion/steve-bannon-on-broligarchs-vs-populism.html
 
An alternate perspective on international migration:
Something Extraordinary Is Happening All Over the World
https://www.nytimes.com/2025/01/31/opinion/trump-migration-world.html 

Silicon Valley Hypocrites

Have we hit peak tech bro?
https://www.ft.com/content/cd2966ed-c458-4485-87a8-a483b79b8457
DeepSeek’s ‘Sputnik moment’ has cut Silicon Valley poseurs down to size.

Oh, I’m sorry, tech bros – did DeepSeek copy your work? I can hardly imagine your distress
https://www.theguardian.com/commentisfree/2025/jan/31/tech-bros-deepseek-china-sam-altman-openai
Marina Hyde:
As the entrepreneur and investor Scott Galloway has pointed out on numerous occasions, big tech are the biggest welfare queens that ever stalked the Earth. They’ve all drawn vast benefits from public money, chased countless tax breaks and demanded even more. Far from being some heroic form of risk-taking done without a single handout, theirs is the capitalism of the school bake sale – someone else buys all the ingredients and does most of the cooking, and the kids then claim they have turned a profit for the good of humanity.
 
Related:
https://medium.com/@profgalloway/tech-billionaires-are-the-new-welfare-queens-b17f8f314989 

Passive Investing and the Efficient Market Hypothesis

How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3821263
 
‘Magical' Efficient-Market Theory Rebuked In Era Of Passive Investing
https://finance.yahoo.com/news/magical-efficient-market-theory-rebuked-140045617.html
According to a study to be published in the prestigious American Economic Review, evidence is building that active managers are slow to scoop up stocks en masse when prices move away from their intrinsic worth. Thanks to this lethargic trading behavior and the relentless boom in benchmark-tracking index funds, the impact of each trade on prices gets amplified, explaining how sell orders, like on Monday perhaps, can induce broader equity gyrations.
As a result, the financial landscape is proving less dynamic and more volatile in the era of Big Passive, according to authors at the UCLA Anderson School of Management, the Stockholm School of Economics and the University of Minnesota Carlson School of Management.
 
The Dominance of Passive Investing and Its Effect on Financial Markets
https://merage.uci.edu/news/2024/10/The-Dominance-of-Passive-Investing-and-Its-Effect-on-Financial-Markets.html
 
Related:
Shiller, Robert, J. 2003. "From Efficient Markets Theory to Behavioral Finance." Journal of Economic Perspectives, 17 (1): 83–104.
https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003321164967

Career versus Family - The Difficult Choices Facing Women

The Child Penalty Atlas
https://doi.org/10.1093/restud/rdae104

Abstract
This paper builds a world atlas of child penalties in employment based on micro data from 134 countries. The estimation of child penalties is based on pseudo-event studies of first child birth using cross-sectional data. The pseudo-event studies are validated against true event studies using panel data for a subset of countries. Most countries display clear and sizable child penalties: men and women follow parallel trends before parenthood, but diverge sharply and persistently after parenthood. While this pattern is pervasive, there is enormous variation in the magnitude of the effects across different regions of the world. The fraction of gender inequality explained by child penalties varies systematically with economic development and proxies for structural transformation. At low levels of development, child penalties represent a minuscule fraction of gender inequality. But as economies develop — incomes rise and the labor market transitions from subsistence agriculture to salaried work in industry and services — child penalties take over as the dominant driver of gender inequality. The relationship between child penalties and development is validated using historical data from current high-income countries, back to the 1700s for some countries. Finally, because parenthood is often tied to marriage, we also investigate the existence of marriage penalties in female employment. In general, women experience both marriage and child penalties, but their relative importance depends on the level of development. The development process is associated with a substitution from marriage penalties to child penalties, with the former gradually converging to zero.
 
Related: https://childpenaltyatlas.org 

Energy Economics

Right-wing wokeism can’t stop green tech winning the global energy war
https://www.telegraph.co.uk/business/2025/01/31/right-wing-wokeism-green-tech-global-energy-war/
The US energy department published a “Moon shot” paper in 2010 arguing that it was theoretically possible to cut solar costs to $1 a watt, and if achieved this would amount to fossil parity without subsidy. Sceptics said it was delusional. That target has since been beaten ten times over.
The price of Chinese solar panels has dropped to nine cents a watt, which is why the ill-run electricity grid in Pakistan is now shrinking at a double-digit annual rate. Every village and every neighbourhood in Lahore or Karachi is erecting off-grid solar panels in a dash for cheap power and energy freedom, lifting solar capacity by 22 gigawatts (GW) in a single year. The government had nothing to do with it. The free market speaks Urdu. 

AI energy demand predictions have echoes of the great horse manure crisis
https://www.telegraph.co.uk/business/2025/01/29/net-zero-risks-leaving-britains-ai-strategy-dead-on-arrival/
Recently announced in a blaze of publicity, Trump’s $500bn (£400bn) Stargate supercomputer complex would require 5GW. Amazon alone proposes to spend $150bn on data centres over the next 15 years.
All these plans now begin to look massively overblown. DeepSeek’s “Sputnik moment” also points to an already monumental, hype-driven misallocation of capital that threatens to drive significant losses and write-offs across the tech sector for some years to come.
Hundreds of billions of investment dollars are being sunk into AI, but so far for little or no return. For comparison, look back to the turn of the century dot-com and mobile telephone bubbles, which gave us a wonderful new technological infrastructure but also an eventual bust in which many people and organisations lost their shirts. 

The Battle Against Government Red Tape

Milei, Modi, Trump: an anti-red-tape revolution is under way
https://www.economist.com/leaders/2025/01/30/milei-modi-trump-an-anti-red-tape-revolution-is-under-way
Done right, deregulation could kick-start economic growth.
 
Many governments talk about cutting regulation but few manage to
https://www.economist.com/briefing/2025/01/30/many-governments-talk-about-cutting-regulation-but-few-manage-to
Yet radical deregulation is often a big boost to growth.
 
Related:
https://www.economist.com/briefing/2025/01/30/even-in-india-bureaucracy-is-being-curtailed 

Data Revisions and Economic Narratives

How undercounting immigration skews narratives
https://www.ft.com/content/522d896b-d949-4676-a15c-0d4bff215062
The US and UK have been underestimating population growth but with diverging implications. 

US and Europe - Growth Update

U.S. Gross Domestic Product, 4th Quarter and Year 2024 (Advance Estimate)
https://www.bea.gov/sites/default/files/2025-01/gdp4q24-adv.pdf
 
U.S. GDP Grew 2.5% in 2024
https://www.wsj.com/economy/us-gdp-economy-fourth-quarter-2024-9ccb1816
Growth slowed slightly in the final quarter of the year, however.
 
Eurozone Economy Stagnates as It Braces for Fresh Blow from Trump Tariffs
https://www.wsj.com/economy/french-economy-shrinks-amid-political-mire-bde5e2f2
The currency area has struggled to recover from a sharp rise in energy and food prices triggered by Europe’s largest military conflict in eight decades. 

Fed Independence Under Threat

Trump Lashes Out at a Favorite Nemesis: The Federal Reserve
https://www.wsj.com/economy/central-banking/trump-lashes-out-at-a-favorite-nemesis-the-federal-reserve-fa31a212
A desire for low rates confronts a very different economic backdrop—with higher price pressures—from his first term.

Donald Trump lashes out at Federal Reserve after central bank keeps rates steady
https://www.ft.com/content/5632daa5-2908-4d21-8090-54a0d2232c3a
 
Will Trump Fire the Fed? by Kenneth Rogoff
https://www.project-syndicate.org/commentary/trump-bid-to-control-fed-puts-us-economy-at-risk-by-kenneth-rogoff-2025-01 

The Basic Problem with Identity Politics

How Liberals Lost America
https://www.project-syndicate.org/commentary/liberal-moral-neutrality-ushered-trump-back-to-power-by-andres-velasco-2025-01
At least since the publication of John Rawls’ monumental “A Theory of Justice” in 1971, liberals have divorced justice from desert, since we don’t deserve our natural endowments, whether that be height, agility, or talent at math. Donald Trump quickly grasped that this view of egalitarianism rubs most US voters the wrong way. 

Foreign Lessons in the Perils of DEI
https://www.wsj.com/opinion/foreign-lessons-in-the-perils-of-dei-trump-administration-policy-india-south-africa-malaysia-33f19d85
The Trump administration saves the U.S. from going the way of India, South Africa and Malaysia.
 
A 2018 piece:
Against Identity Politics: The New Tribalism and the Crisis of Democracy by Francis Fukuyama
https://www.foreignaffairs.com/articles/americas/2018-08-14/against-identity-politics-tribalism-francis-fukuyama

Yikes - Reading Skills Continue to Decline

American Kids Are Getting Even Worse at Reading
https://www.wsj.com/us-news/education/reading-test-scores-american-students-5fb78d4e
New national test scores show a continuing slide in reading skills. 

American Kids Are Getting Even Worse at Reading
https://www.wsj.com/us-news/education/reading-test-scores-american-students-5fb78d4e

Germany Needs Expansionary Fiscal Policy

Germany’s omerta on the debt brake is costing it dearly
https://www.ft.com/content/ea4ba027-92e5-4744-9327-0de15fe7706c
The country’s fiscal rules stifle much-needed investment and create perverse incentives for its European partners. 

What’s Wrong with Germany’s Economy?
https://www.project-syndicate.org/commentary/addressing-german-economic-underperformance-requires-eu-innovation-by-michael-spence-2025-01

Paul Krugman’s Take:
https://paulkrugman.substack.com/p/revenge-of-the-black-zero

Foreign Investment in Pakistan

What went wrong with ‘Pakistan’s Dubai’? – inside the Chinese initiative that is prompting terror attacks
https://www.theguardian.com/world/2025/jan/26/what-went-wrong-with-pakistans-dubai-inside-the-chinese-initiative-that-is-prompting-terror-attacks
The small port city of Gwadar has a huge new airport funded by China, but local suspicion of Beijing’s true intentions threatens to wreck the project.
 
How Pakistan’s military is taking over its economy
https://www.ft.com/content/f3dae073-c158-43e2-a8c6-628acc46a868
The country’s armed forces have become intimately involved in everything from canal projects to energy contracts. Investors are increasingly nervous. 

The Bond Market Term Premium Debate

Listen to the Bond Market, Because It’s Flashing a Warning
https://www.nytimes.com/2025/01/29/opinion/trump-inflation-bonds-debt-yield.html

Is Now the Time to Buy Bonds? Watch the White House, Not the Fed.

https://www.wsj.com/personal-finance/when-buy-bonds-white-house-fed-fdd01b84
 
My take from November 2023:
Back to the future? The new interest rate normal might look a lot like the pre-crash era
https://thehill.com/opinion/finance/4299865-back-to-the-future-the-new-interest-rate-normal-might-look-a-lot-like-the-pre-crash-era/
Economic theory suggests that the 10-year T-note yield reflects expectations about the future path of short-term interest rates, which in turn reflect current expectations regarding inflation and economic growth. The term premium that goes with longer-term debt captures the risk compensation associated with the uncertainty surrounding future inflation and economic outlook, as well as the uncertainty surrounding interest rate changes that may occur over the life of the bond. After remaining persistently negative for several years, the term premium has finally turned positive.  

Tariffs and Fed Policy

Why Tariffs Are a Key Wild Card for the Fed
https://www.wsj.com/economy/central-banking/the-trouble-with-tariffs-what-you-think-about-prices-matters-to-the-fed-a4c7acf7
A trade war that stokes inflation would be much more complicated for the central bank now than it was during Trump’s first term. 

High Inflation Sows Debate About New Fed Playbook for Tariffs
https://www.nytimes.com/2025/01/31/us/politics/fed-tariffs-inflation-canada-mexico.html
Fresh tariffs amid high inflation are making the Fed’s job uniquely difficult and feeding uncertainty about what to expect for interest rates this year.

Thinking Machines

We will have to learn to live with machines that can think
https://www.ft.com/content/0ca24f99-f800-4102-a7b8-ac51a5ca2005
The impact of artificial intelligence on productivity could be epoch-making. 

Things AI cannot do:

Australians cash in on shortage of electricians
https://www.ft.com/content/0bef16b6-f8ab-48e6-9978-6c496ff2f19f
A shortage of electricians means that those willing to endure long shifts and live on remote sites can potentially earn up to A$200,000 (US$124,000) a year — double the national average salary and not far off the average MP salary.
“It’s a cup half full/half empty life. You do 12-hour shifts, there’s the heat, the flies and you’re stuck in a donga [temporary housing] in a single bed. But you’re fed well and everything’s covered. You leave your credit card at home. You earn good money and you get plenty of time off,” said Dowsett of his life as a fly-in, fly-out electrician.
The high salaries reflect the fact that fewer Australians want to be electricians, creating a potentially devastating shortage as major renewable energy, mining and data centre projects come online.

US Tech Stocks - Temporary Hiccup or the Beginning of the End of the AI Bubble

I Study Financial Markets. The Nvidia Rout Is Only the Start.
https://www.nytimes.com/2025/01/28/opinion/nvidia-deepseek-ai-valuation-ouroboros.html
 
DeepSeek Undercuts Belief That Chip-Hungry U.S. Players Will Win AI Race
https://www.wsj.com/tech/ai/deepseek-tech-stocks-a3e83478
More AI competition will make it hard for Big Tech to generate the oligopoly-like profit margins that investors hope for. 

Cognitive Bias

Why Common Problems Are Often Worse Than We Realize
https://www.nytimes.com/2025/01/27/opinion/big-problem-paradox.html
A problem that affects a lot of people is more important than one that doesn’t, right?
Except that’s not how we human beings process the information, according to a new research paper. Telling people that a problem is prevalent tends to make them decide it’s less serious, the paper found. People think that the world is basically safe and that problems get addressed, so if something is common, they figure, how bad can it really be? 

A Logistical Challenge?

What it would take for America to deport 11mn immigrants
https://www.ft.com/content/59232a13-f7e2-40cd-af73-4035037cb3b3 

Electrification Push in Africa

Inside a New Plan to Bring Electricity to 300 Million in Africa
https://www.nytimes.com/2025/01/27/climate/africa-world-bank-solar-electricity.html
Some $35 billion is aimed at building small solar sites in rural areas and other improvements. The World Bank chief called the project “foundational to everything.” 

The Global Competition for Land, Water, and Other Resources

The coming great global land reshuffle
https://www.ft.com/content/28449034-331d-4384-b17b-05bab2daab81
Climate change and population pressures are beginning to drive a new surge of competition over territory. 

In a New Age of Empire, Great Powers Aim to Carve Up the Planet
https://www.wsj.com/world/in-a-new-age-of-empire-great-powers-aim-to-carve-up-the-planet-fef072f7
After World War II, nations pledged to create a more equal and law-abiding world. Now Russia, China and the U.S. are returning to an older model in which powerful countries impose their will. 

China’s Tibet Dam Project Has Its Neighbors Worried
https://www.nytimes.com/2025/01/27/world/asia/china-tibet-dam-india.html

Here’s where water is running out in the world — and why
https://www.washingtonpost.com/climate-environment/interactive/2023/water-scarcity-map-solutions/

AI and Existential Risk

The Rush to A.I. Threatens National Security
https://www.nytimes.com/2025/01/27/opinion/ai-trump-military-national-security.html 

When Artificial Intelligence Passes This Test, Look Out

https://www.nytimes.com/2025/01/23/technology/ai-test-humanitys-last-exam.html

The creators of a test called “Humanity’s Last Exam” argue we may soon lose the ability to create tests hard enough for A.I. models, our columnist writes.

The A.I. Dilemma: Growth versus Existential Risk
https://web.stanford.edu/~chadj/existentialrisk.pdf
Advances in artificial intelligence (A.I.) are a double-edged sword. On the one hand, they may increase economic growth as A.I. augments our ability to innovate. On the other hand, many experts worry that these advances entail existential risk: creating a superintelligence misaligned with human values could lead to catastrophic outcomes, even possibly human extinction. This paper considers the optimal use of A.I. technology in the presence of these opportunities and risks. Under what conditions should we continue the rapid progress of A.I. and under what conditions should we stop? 

China's DeepSeek Challenges US Dominance of AI Tech

How Chinese A.I. Start-Up DeepSeek Is Competing With Silicon Valley Giants
https://www.nytimes.com/2025/01/23/technology/deepseek-china-ai-chips.html
The company built a cheaper, competitive chatbot with fewer high-end computer chips than U.S. behemoths like Google and OpenAI, showing the limits of chip export control.
 
Advances by China’s DeepSeek sow doubts about AI spending
https://www.ft.com/content/e670a4ea-05ad-4419-b72a-7727e8a6d471
Start-up’s model raises questions about need for huge western hardware investment. 

DeepSeek sell-off shows the risks of a concentrated US stock market
https://www.ft.com/content/dc193d22-3221-4945-b0b1-430a12966d2f
Should investors turn to equally weighted index products?

China’s lightning AI success should frighten Wall Street – and Trump
https://www.telegraph.co.uk/business/2025/01/26/china-lightning-ai-success-frighten-wall-street-trump/

Silicon Valley Is Raving About a Made-in-China AI Model
https://www.wsj.com/tech/ai/china-ai-deepseek-chatbot-6ac4ad33
DeepSeek is called ‘amazing and impressive’ despite working with less-advanced chips.

How China’s New AI Model DeepSeek Is Threatening U.S. Dominance
https://youtu.be/WEBiebbeNCA

How small Chinese AI start-up DeepSeek shocked Silicon Valley
https://www.ft.com/content/747a7b11-dcba-4aa5-8d25-403f56216d7e 

How a Chinese A.I. Start-Up Is Competing with Silicon Valley Giants

https://www.nytimes.com/2025/01/23/technology/deepseek-china-ai-chips.html

DeepSeek built a cheaper, competitive chatbot with fewer high-end computer chips than Google and OpenAI, showing the limits of chip export control.

Chinese start-ups such as DeepSeek are challenging global AI giants
https://www.ft.com/content/c99d86f0-2d17-49d0-8dc6-9662ed34c831
Their models are cheaper thanks to US export restrictions that have inadvertently spurred innovation.

Chinese AI is catching up, posing a dilemma for Donald Trump
https://www.economist.com/leaders/2025/01/23/chinese-ai-is-catching-up-posing-a-dilemma-for-donald-trump
https://www.economist.com/briefing/2025/01/23/chinas-ai-industry-has-almost-caught-up-with-americas

Germany Needs a New Economic Model

Germany’s Economic Model Is Broken, and No One Has a Plan B
https://www.wsj.com/economy/trade/germany-economic-model-broken-exports-095a488d
The country is focused on exports, but China is slowing imports and U.S. tariff threats are growing. Politicians are offering few alternatives. 

The Disappearing Equity Risk Premium

The Extra Reward for Owning Stocks Over Bonds Has Disappeared
https://www.wsj.com/finance/stocks/the-extra-reward-for-owning-stocks-over-bonds-has-disappeared-c3f9c223
There is little sign of crimped demand for equities among individual investors, who remain bullish after two years of blockbuster gains. 

Rethinking Property Values in Climate Disaster Zones

What Will It Take for Home Buyers to Start Asking for a Disaster Discount?
https://www.wsj.com/real-estate/what-will-it-take-for-home-buyers-to-start-asking-for-a-disaster-discount-c662cb96
Real costs of owning a house in neighborhoods that are vulnerable to flooding and wildfires are becoming clearer. 

The Reality of American Democracy

A New York Times analysis shows new maps stifled partisan competition for seats in the House of Representatives and state legislatures.
https://www.nytimes.com/2025/01/26/us/politics/2024-elections-congress-state-redistricting.html
A New York Times analysis of the nearly 6,000 congressional and state legislative elections in November shows just how few races were true races. Nearly all either were dominated by an incumbent or played out in a district drawn to favor one party overwhelmingly. The result was a blizzard of blowouts, even in a country that is narrowly divided on politics. 

American Hubris?

The world is moving on to trade without the US
https://www.ft.com/content/07eac548-6607-4c88-bfe3-4f1d6e3b8cf2
Many nations have been responding to Trump tariffs not by retaliating but by courting other trade partners
 
Trump’s new economic war
https://www.ft.com/content/f5006dab-8d12-4dbd-b053-3e3c70eb028c
Some caution against being awestruck by Trump’s threats or his espousal of capitalism without limits, because his agenda was so incoherent.
“What we are seeing is huge doses of American hubris,” says Arancha González, dean of the Paris School of International Affairs at Sciences Po. “We are blinded by the intensity of all the issues put on the table and by Trump’s conviction. But we are not looking at the contradictions. It’s like we are all on an orange drug.” 

What the global south gets wrong about Trump
https://www.ft.com/content/51e4c1a6-ef17-4e14-bea3-645e611008a3
Gideon Rachman:
Westerners may be shocked to see a US president talk like a mafia boss who wants more protection money. But many in the global south have always believed that American leaders act like mobsters — even if they talk like missionaries. At least, they say, Trump has now dropped the infuriating moralising. The hope is that a less hypocritical US will be easier to deal with, because it will not make unrealistic demands based on irrelevant western values.
But we are beginning to see what a US that proudly proclaims it has no altruistic interest in the outside world looks like — and it is not pretty.

Rising Credit Card Balances

Americans Are Carrying Bigger Credit-Card Balances
https://www.wsj.com/finance/banking/america-us-credit-card-balances-minimum-payment-867eabd4
With interest rates near record highs, revolving balances are growing 

The Great Gatsby

How we misread The Great Gatsby
https://www.newstatesman.com/culture/books/2025/01/how-we-misread-the-great-gatsby
The greatness of F Scott Fitzgerald’s novel lies in its details. But they are often overlooked. 

Africa's Demographic Problem

Why is African Teen Fertility So High?
https://www.ggd.world/p/why-is-african-teen-fertility-so 

The Highly Accomplished Usha Vance

Meet Usha Vance, the new second lady of the United States
https://www.bbc.com/news/articles/c897483zpyeo
https://www.bbc.com/news/articles/c1kewgzw1j3o
Related:
https://www.telegraph.co.uk/world-news/2025/01/25/usha-vance-cambridge-university-gates-scholarship-history/ 

Stocks, Bonds, Cryptos, and Sports Betting - Be Aware of Financial Risks

Oaktree Capital’s Howard Marks on Bubble Watch
https://youtu.be/riyoadkNlco

Animal spirits in markets risk running too far

https://www.ft.com/content/4d3eed1b-22aa-437f-8337-460f00e35363

US stocks at most expensive relative to bonds since dotcom era
https://www.ft.com/content/f8b6dbb5-eb9b-4639-b72a-e7c9b2925bb3 

My investment plan as Trump moves fast and breaks things

https://www.telegraph.co.uk/business/2025/01/23/my-investment-plan-donald-trump-moves-fast-breaks-things/

Tom Stevenson, an investment director at Fidelity International, notes:

Humans run in packs and the temptation is to stick with what’s popular even as the investment case for doing so is fading. Rebalancing is a simple, mechanistic way of introducing discipline into our portfolios. We all invest better when guided by rules, not gut instinct.

Financial Advice on Social Media Is Growing. And Risky.
https://www.nytimes.com/2025/01/25/business/financial-advice-social-media-influencers.html
Everyday investors are turning to financial influencers, or ‘fin-fluencers,’ to learn how to manage their finances, but experts say rooting out misinformation is challenging.

Crypto is celebrating but Trump’s boosterism could end badly
https://www.ft.com/content/8d302c79-8912-4f8e-bb1a-eea77ea0d99e
Cornell Economist Eswar Prasad:
The mainstreaming of crypto and the benign attitude of regulators will also spur closer connections between the industry and traditional financial institutions such as commercial banks and investment management firms. These connections will expose the conventional financial system to risk spillovers.

Trump’s Crypto Venture Divides the Industry He Aims to Support
https://www.nytimes.com/2025/01/25/us/politics/trumps-crypto-venture-divides-the-industry-he-aims-to-support.html
President Trump’s promotion of a speculative digital coin left some investors feeling blindsided, while others saw it as undermining the industry’s credibility.

America Has Fallen in Love with Long-Shot Sports Bets
https://www.wsj.com/business/what-are-parlays-sports-betting-gambling-881bdaee
Parlays, the tough-to-win multipart wagers with tantalizing payouts, are bringing in casual and newbie gamblers, and betting companies are making a killing.

Home Sales - Still Stagnant

U.S. Homes Sales in 2024 Fell to Lowest Level in Nearly 30 Years
https://www.wsj.com/economy/housing/u-s-homes-sales-in-2024-fell-to-lowest-level-in-nearly-30-years-3ce94fd9
Higher mortgages rates and record home prices kept sales subdued for the second straight year. 

Trump Shock Therapy and Government Services

Swaths of U.S. Government Grind to a Halt After Trump Shock Therapy
https://www.wsj.com/politics/policy/swaths-of-u-s-government-grind-to-halt-after-trump-shock-therapy-42a6b000
Rescinded job offers, delayed health updates and confusion over cutting government checks upend business as usual across Washington. 

BOJ Rate Hike

Japan Raises Interest Rates to Highest Level Since 2008
https://www.nytimes.com/2025/01/23/business/bank-of-japan-interest-rates.html
The return of inflation and wage growth is giving the Bank of Japan room to raise interest rates and declare the end of a long period of stagnation. 

Trump's Energy Policy

When it comes to energy, Donald Trump is China’s useful idiot
https://www.telegraph.co.uk/business/2025/01/24/when-it-comes-to-energy-donald-trump-is-chinas-useful-idiot/
The US president’s ‘drill, baby, drill’ strategy ignores long-term global trends. 

Trump’s Inflation Fix Centers on Energy Emergency That Doesn’t Exist

https://www.nytimes.com/2025/01/24/business/trump-energy-emergency-inflation.html

Economists and analysts aren’t convinced that an expansion of oil and gas production will lower consumer prices.

The Economist on Trade Tariffs

Do tariffs raise inflation?
https://www.economist.com/finance-and-economics/2025/01/23/do-tariffs-raise-inflation
 
Tariffs will harm America, not induce a manufacturing rebirth
https://www.economist.com/leaders/2025/01/21/tariffs-will-harm-america-not-induce-a-manufacturing-rebirth 

Related:

Protectionism is Failing and Wrongheaded: An Evaluation of the Post-2017 Shift toward Trade Wars and Industrial Policy
https://www.economicstrategygroup.org/wp-content/uploads/2024/10/Strain-AESG-2024.pdf

Trump’s Trade Scam
https://www.project-syndicate.org/commentary/trump-external-revenue-service-is-a-scam-by-stephen-s-roach-2025-01

The Problem of Presidential Pardons

Presidential Pardons Escalate as Modern Political Weapon
https://www.wsj.com/politics/policy/presidential-pardons-escalate-as-modern-political-weapon-cb566e20
Dueling moves by Trump and Biden open new frontiers for one of the most sweeping powers in the Constitution.
 
The Corruption of the Pardon Power by Albert W. Alschuler
https://chicagounbound.uchicago.edu/public_law_and_legal_theory/730/ 

The Adverse Effects of Social Media

How Tech Created a ‘Recipe for Loneliness’
https://www.nytimes.com/2024/11/10/technology/personaltech/technology-loneliness.html
Technology and loneliness are interlinked, researchers have found, stoked by the ways we interact with social media, text messaging and binge-watching. 

Young people are hanging out less — it may be harming their mental health
Could the decline of face-to-face interaction tie together several modern mysteries?
https://www.ft.com/content/23053544-fede-4c0d-8cda-174e9bdce348
John Burn-Murdoch:
The last decade is a story of young people retreating from the pursuits that bring them the most fulfilment, and replacing them — consciously or otherwise — with pale imitations. Like the proverbial frog in the pot of water, the damage in any given moment is too subtle to cut through, but several years in we may be starting to reach a roiling simmer.  

Is Social Media More Like Cigarettes or Junk Food?
https://www.newyorker.com/culture/infinite-scroll/is-social-media-more-like-cigarettes-or-junk-food
Lawmakers attempting to regulate children’s access to social media must decide whether bans or warning labels are the optimal route for keeping kids safe.

Jonathan Haidt on the Anxious Generation - Firing Line with Margaret Hoover
https://youtu.be/-L0ae8_o5IE

Peak Pessimism on Europe

Davos hits ‘peak pessimism’ on Europe as US exuberance rises
https://www.ft.com/content/7071e5cb-b9ad-490e-8702-44e9434aab1f

Jeremy Warner:
https://www.telegraph.co.uk/business/2025/01/21/trump-20-will-leave-europe-looking-like-a-basket-case/
So here are a few of the things chief executives are saying about the US and wider world economies here in Davos.
Unsurprisingly, there is a lot of positivity around prospects for the US, India and parts of Latin America and South East Asia. But there is a real downer on the outlook for Europe, including the UK, where the economy has essentially ground to a halt and is not expected to show significant growth in any foreseeable future. 
 
The quest to create European corporate champions
https://www.ft.com/content/87be2259-5e0e-4dce-a667-c9e7e26aff76
Worries about the EU’s waning competitiveness have prompted a rethink of merger rules that prioritised consumers. 

Investors Bet Trump Will Make Europe Investable Again
https://www.wsj.com/finance/investors-bet-trump-will-make-europe-investable-again-8ed23eff
The big hope is that Europe will move faster to implement reforms in the face of competitive threats from the U.S.

Digital Tech and Education

Screens Have Taken Over Classrooms. Even Students Have Had Enough.

https://www.wsj.com/us-news/education/schools-phone-screens-technology-research-c268bda5

Educators question whether the rapid shift toward more technology has benefited learning.