During a White House press conference, US President Donald Trump was asked about a new Wall Street acronym, TACO – Trump Always Chickens Out – which referred to his repeated tariff threats followed by retreats. This made Trump furious (indiatoday).
To add insult to injury, a U.S. trade court blocked most of President Donald Trump's tariffs (reuters). It is now under appeal.
You never call out an antisocial narcissist with paranoid personality disorder. But now that you have, we begin the FAFO - Fcuk Around and Find Out - stage.
With Donny cornered, expect more volatile pronouncements over tariffs, taxes and immigration, as he tries to shift attention away from his failures.
Markets this Week
Links
Why Keynes Opposed Free Capital Flows (commonplace)
Research
Profitability Retrospective: What Have We Learned? (SSRN)
Profitability subsumes all of “quality” investing, explaining both the performance of the strategies that industry markets and the factors that academics employ. It also has striking power pricing “defensive equity” strategies that overweight low-beta or low-volatility stocks. Profitability tilts explain all the abnormal performance of popular “alternative value” strategies, including those adjusted for “intangibles,” and half of value's post-2007 underperformance.
How Much Should You Pay for Alpha? (SSRN)
Not as much as you might think! We compute the amount an investor is willing to pay to access an active fund starting from an optimal equity-bond portfolio.
No Country for Dying Firms: Evidence from India (NBER)
This paper identifies exit barriers as a new reason for India’s underdeveloped manufacturing sector. These barriers not only deter entry but also trap resources in unproductive firms. Our analysis yields three findings. First, reducing firing costs raises value added but reduces employment, whereas relaxing direct exit barriers increases both. Second, simultaneous reform of labor firing costs and direct exit barriers yields synergies. Third, sequencing matters: addressing direct exit barriers before labor firing costs preserves employment while improving efficiency. Finally, we show that exit subsidies are more effective at raising value added, while entry subsidies are more effective at increasing employment.
Divorce, Family Arrangements, and Children's Adult Outcomes (NBER)
Nearly a third of American children experience parental divorce before adulthood. In the years following divorce, we observe sharp increases in teen births and child mortality. We find that parental divorce reduces children's adult earnings and college residence while increasing incarceration, mortality, and teen births. Changes in household income, neighborhood quality, and parent proximity account for 25 to 60 percent of these divorce effects.
Tariffs
China Called Trump’s Bluff (theatlantic)
Trump: US to double tariffs on steel and aluminium imports to 50% (bbc)
Four tools at the Trump administration’s disposal after a U.S. court blocks tariffs (cnbc).
The Trump administration sees tariff talks as a chance to pressure a rival into concessions. E.U. officials have acted as though they were dealing with an ally (nytimes).
Secretary of State Marco Rubio ordered US embassies worldwide to stop scheduling interviews for student visas as the Trump administration weighs stricter vetting of applicants’ social-media profiles (bloomberg).
U.S. Will ‘Aggressively’ Revoke Visas of Chinese Students (nytimes).
India
In most faiths judgment is delivered in the afterlife. India’s judiciary seems to have adopted a similar approach (economist).
Income tax dept tightens grip on treaty shopping, sends notices to NRIs, foreign firms in tax havens (cnbctv18).
India’s booming Global Capability Centre (GCC) ecosystem and Indian subsidiaries of multinational corporations have come under heightened scrutiny from Goods and Services Tax (GST) authorities (cnbctv18).
Brookfield Asset Management Ltd. expects to grow its India business to $100 billion from $30 billion in the next five years (bloomberg).
India plans to spend 850 billion rupees ($10 billion) to purchase 112 crude carriers through 2040 as the world’s third-biggest importer of oil seeks to have its own fleet to secure supplies (bloomberg).
Jio BlackRock gets approval to start mutual fund business in India (reuters).
China Provided Pakistan Satellite Support (outlookindia)
row
Trump and his family have monetized the White House more than any other occupant, normalizing activities that once would have provoked heavy blowback and official investigations (nytimes).
10 Ways to Enrich the Trumps and the MAGA Movement (motherjones).
Grifters thrive under Trump’s scam-friendly administration. Gutted watchdog agencies and unprecedented ‘influence peddling’ means unrestrained fraud (theverge).
Trump’s tax bill calls for, among other things, increasing tax rates for individuals and companies from countries whose tax policies the US deems “discriminatory.” This includes raising tax rates on passive income, such as interest and dividends, earned by investors who are potentially sitting on trillions in American assets (bloomberg).
Elon Musk is leaving the government with shattered public approval, furious investors, and a to-go bag of grift and corruption to ensure the whole ordeal was worth his time (rollingstone).
UBS has started using artificial intelligence to turn its analysts into avatars, sending videos of the simulated bankers to clients. The bank is using OpenAI and Synthesia models to create AI-generated scripts and avatars of its analysts following increased client demand for research in video format (ft).
AI layoffs: Job cuts are hitting knowledge workers from entry-level to management, from tech-forward companies to more staid corners of Corporate America (qz).
Investors are learning how hard it is to get money out of private equity and venture capital (economist).
Has the American Dream Become Unattainable? (ofdollarsanddata)
The lessons from China’s dominance in manufacturing (ft).
Xiaomi commits $6.9 billion to in-house chips (cnbc).
China has shifted from a net capital provider to developing countries to their biggest debt collector (scmp).
Highly infectious new COVID strain from China that led to massive spike in hospitalizations has spread to the US — including NYC (nypost).
Tensions rise as superpowers scrap for a piece of the Arctic (bbc).
Meme of the Week
