👋 ASB Partners Nuggets 9.5.25
This is a short weekly email that covers a few things I’ve found interesting during the week.
Interesting Links/Reads
Many links are sourced from Marginal Revolution (bold and italics are my own to highlight what I found particularly interesting)
What are the markets telling us? by Tyler Cowan
That is the topic of my latest piece for The Free Press, as after all stock valuations are high. Excerpt:
First, the One Big Beautiful Bill Act, passed earlier this year, slashed corporate taxes. Before Trump’s first term, the corporate tax rate was 35 percent; in his first term Trump cut it to 21 percent, and this year he and the Republican Congress extended aspects of that first-term tax bill. Factors such as 100 percent bonus depreciation and expanded interest deductions give many companies the ability to lower their tax bill further, though not in a way that can be expressed readily by any single number.
With these lower tax burdens, companies should be worth much more. At the same time, the American taxpayer now owes more than $37 trillion in debt. So someone has to pay higher taxes over time, to satisfy those obligations. That someone probably is you, so you might want to take that into account in your overall assessment. But you should feel good about the companies, and somewhat less good about yourself and your children, given the tax hikes in the offing, sooner or later. You are paying for some of those higher stock market values.
Plus the ten or so percent decline in the value of the dollar can be seen as a loss of confidence in the United States, for a bunch of the obvious reasons. But will the country fall apart? Probably not:
That said, some of the worries are exaggerated. I’ve seen lots of posts on X lately saying that Trump is destroying the independence of the Federal Reserve system, and that this change will bring much higher rates of price inflation. Maybe. But that is not what the markets are saying. There are different measures of expected inflation, and most stand between 2 and 3 percent, with some of the more important market measures clustered near 2.5 percent. You might think that is higher than it should be, but it is hardly a sign of pending hyperinflation. It’s also not different from how things were toward the close of Joe Biden’s term.
And this:
Finally, are you worried about fascism coming to America? The collapse of democracy? Did you read about the Trump critics Jason Stanley, Timothy Snyder, and Marci Shore moving from America to Canada?
Well, head on over to the prediction markets—for instance, Kalshi. Currently the Democrats are favored at 53 percent to win the next presidential election. In other words, it costs 53 cents to buy a security that pays off a dollar if the Democrats win. In turn, that means the market thinks the Democrats have a very slight advantage in 2028. Does that sound like the collapse of democracy to you?
I return here to the same logic: If you think the market is being naive and foolish, why aren’t you placing your bets in the opposite direction? At the very least you could be wealthier under the forthcoming fascism you predict, and you might even be able to donate your winnings to antifascist causes.
2.The future of trash pick-up? (WSJ)
Podcast/Videos
Show notes from Peter Attia Podcast “The Drive”
BROOKS: I think it’s left the humanities. I think the humanities have been backfooted, in part because, again, internet, all that stuff, the obvious stuff. The reason you would go to become an English major was because you want to understand how human beings operate. You want to be able to see the world. One of my heroes is this guy named John Ruskin, a 19th-century art critic. He says, for each thousand who can talk, there’s one who can think, but for each thousand who can think, there’s one who can see. It’s that ability to see reality. You go to Tolstoy — that guy could see reality.
COWEN: I still have many mentors, and they’re mostly younger. They teach me things like AI. I think you need more mentors as you get older, actually, not fewer.
BROOKS: Yes. this may pertain to the subject. I read this book, Snowball, about Warren Buffett. What’s remarkable about him was his ability to grab onto whoever could teach him. Early, when he was a socially awkward kid, he grabs onto Dale Carnegie. This guy provides him with a system to socialize. Then he gloms onto Ben Graham and his investing model. Then he gloms onto Charlie Munger. You think, “Oh, he’s still glomming on in his 40s.”
Then in his 50s, he gloms onto Catherine Graham, the owner of the Washington Post. She’s taking him to parties in New York and Washington, which are totally alien to him, and he’s loving it because he’s getting to sit next to Dolly Parton and Lady Di. He thinks, “This is great. I get to enter a new world.” Then in his 70s, he gloms onto Bill Gates. He teaches him about philanthropy and the tech.
One of the things I admire most is people who are different in their 70s than they were in their 60s, different in their 50s than they were in their 30s. Warren Buffett is a guy who just gloms onto whoever can teach him. That would be an example of being mentored through life.
George Marsden is a historian who said that what gave Martin Luther King’s rhetoric such power was his sense that morality — right and wrong are built into the natural law of the universe. That segregation is not wrong in some places. It’s that segregation is always wrong; slavery is always wrong. That sense of a held moral order was essential to the existential security of all people in our society and our ability to settle disputes, because we had an understanding of right and wrong.
BROOKS: First, let me get the headline before we get to your caveats. Charles de Gaulle wrote a memoir, and in that first sentence of the memoir, his memoir, was, “All my life, I’ve had a certain idea about France.” I would say all my life, I’ve had a certain idea about America, that we’re sometimes a foolish nation. We’re often a naive nation, but we’re rarely a cruel and ill-intentioned nation. We may disagree about this, but I thought the decision, at least temporarily, to get rid of PEPFAR was deliberate and cruel.
You wrote the book on talent, and one of the points you make in there that I truly believe in is that intelligence matters. We both agree on that, but stamina really matters. Determination really matters. I won’t say the AI CEO, who was off the record, so I can’t mention his name, but you can guess.
I hope you enjoyed it.
Adam