Quote of the Day
"Since investing and managing money is a decision overlay that sits on top of research and analysis functions, the manager’s efficacy is rate-limited not by brains but by wisdom. We should be a bit more obsessed with where wisdom comes from than continue to fall for dazzling minds."
(Kris Abdelmessih)
Markets
- Bank stocks are rallying. (trendlabs.com)
- How Japan's stock market has changed over time. (apollo.com)
- In this market, big stocks are making really big moves. (awealthofcommonsense.com)
Strategy
- On the limits of financial modeling. (tker.co)
- The hype machine has never been more impactful in markets. (investing101.substack.com)
- Leverage plus concentration is a deadly mix. (moontower.substack.com)
AI
- DeepSeek is putting downward pressure on model pricing. (axios.com)
- Demand for compute is only moving in one direction. (downtownjoshbrown.com)
- For better or worse, Larry Ellison has gone all-in on AI. (nytimes.com)
- Checking in on the OpenAI-Anthropic rivalry. (wsj.com)
- Why the frontier labs may not make their best models publicly available. (bigtechnology.com)
Taxes
- Why corporate tax revenues keep trending lower. (bloomberg.com)
- The creator of the 401(k) plan admits it doesn't work well for lower wage workers. (wealthmanagement.com)
- How billionaires avoid paying taxes. (crr.bc.edu)
Law and order
- The U.S. keeps blowing up boats, but cocaine flows freely into the U.S. (washingtonpost.com)
- Texas' prison system has an air conditioning problem. (slate.com)
- Why the DOJ dropped the Reflecting Pool vandalism case. (cnn.com)
Immigration
- 300,000 Haitians in the U.S. are losing their legal status. (npr.org)
- Why is this agency sending tips to ICE? (reuters.com)
Stay in touch
- Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)
- Work in wealth management? Sign up for our exclusive Talking Wealth newsletter. (talkingwealthpod.com)
Trump
- An inside look at how the Trump fundraising machine works. (wsj.com)
- Capital One ($COF) closed Trump Organization's accounts in 2021 after an anti-money laundering probe. (reuters.com)
Policy
- Companies are looking to do deals now that they would never had considered before. (nytimes.com)
- America politicians are older, but aren't dying in office at a more rapid rate. (theargumentmag.com)
- AI companies are spending big this election cycle. (politico.com)
Economy
- Kevin Warsh is not inspiring confidence. (danieldrezner.substack.com)
- The market is worried the Fed is going to make a policy mistake. (apollo.com)
- The economic schedule for the coming week. (economicweekly.substack.com)
Earlier on Abnormal Returns
- Top clicks last week on Abnormal Returns. (abnormalreturns.com)
- What you missed in our Saturday linkfest. (abnormalreturns.com)
Mixed media
- Miles Bryan talks with journalist Ryan Broderick about how 'Google zero' could break the Internet. (podcasts.apple.com)
- Why Google quickly backtracked on this Google Earth feature. (npr.org)
- Charlie Warzel talks to Claire Stapleton, author of "Don't Be Evil: Bad Bosses Fake Promises and My Escape from Big Tech – A Biting Memoir of Twelve Years Inside Google." (theatlantic.com)
Facts Only
Bank stocks are currently rallying.
DeepSeek is affecting model pricing.
Larry Ellison has invested in AI.
OpenAI and Anthropic are in competition.
Corporate tax revenues are trending lower.
300,000 Haitians in the U.S. are losing legal status.
Capital One closed Trump Organization accounts in 2021 following an anti-money laundering probe.
AI companies are spending funds during the current election cycle.
The 401(k) plan was created by an individual who now states it does not work well for lower-wage workers.
Texas prisons have air conditioning issues.
Executive Summary
Current market dynamics are characterized by rallying bank stocks and significant volatility in large-cap equities, while the AI sector faces a shift in pricing pressure driven by DeepSeek and aggressive investments from figures like Larry Ellison. There is an ongoing tension between frontier AI labs regarding the public availability of their most advanced models and a competitive rivalry between OpenAI and Anthropic.
On the policy and social front, significant challenges persist regarding the legal status of Haitian migrants and systemic failures in the 401(k) system for low-income earners. Legal and political scrutiny continues to surround the Trump Organization's past financial relationships and the current spending habits of AI firms in election cycles. Economic uncertainty remains, as market participants express concern over potential Federal Reserve policy mistakes and the perceived lack of confidence in Kevin Warsh.
Full Take
SKEPTICAL MODE
The strongest version of this narrative is that we are inhabiting a moment of extreme systemic transition where the "hype machine" of AI is colliding with old-world financial and political structures. The core insight is that technical brilliance (brains) is insufficient without the wisdom to manage risk, particularly when leverage and concentration are combined in volatile markets.
The root cause of this discourse is the belief that the current era of "dazzling minds" in tech and finance has decoupled from the practical wisdom of risk management. This echoes the historical pattern of speculative bubbles where the tools of analysis (financial modeling) are mistaken for the reality they attempt to simulate. The unstated assumption is that the "hype machine" is now a primary driver of market pricing, potentially overriding fundamental value.
The implications for human agency are profound; as AI models potentially become proprietary and "closed" by frontier labs, the democratization of intelligence may be replaced by a new form of digital feudalism. The cost is borne by the low-wage worker for whom the 401(k) failed, and the migrant losing legal status, while the benefit accrues to those capable of navigating the "decision overlay" of wealth management.
Patterns detected: none
If this were a coordinated influence campaign, the playbook would involve "Information Flooding"—mixing high-level financial anxiety with fragmented social grievances to create a sense of general instability and systemic failure, thereby priming the audience to seek a "strongman" or a radical systemic overhaul. The actual content does not match this; it is a curated list of disparate links reflecting a wide range of global events.
Bridge Questions:
If the most powerful AI models are never made public, how does that alter the trajectory of global economic productivity?
What specific metrics define "wisdom" in wealth management as opposed to "intelligence"?
Which structural changes to the 401(k) would actually serve lower-wage workers without compromising the system's stability?
