Weekly Good Reads: 5-1-1
World Market Rally, Davos, Tariffs, Market Valuation, Hedge Fund Fees, AI Tutorial/Course
Welcome to a new Weekly Good Reads 5-1-1 by Marianne, a 25-year investment practitioner sharing something interesting and topical in investing, the economy, wellness, and AI/productivity.
Thank you for supporting my work. I appreciate you for reading and taking the time!
Sharing the quote of the week:
Thinking seriously about the future can be a worthwhile exercise, not because the future is knowable but because the process is likely to make us wiser.
~Tim Harford on “Why We Forecast”
You will find some useful sections below.
Weeklies archive | Investing | Ideas | Index of charts and terms
Conversations with Female Investors and more (to inspire more females into finance and investment careers 🙌.)
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Market and Data Comments
Trump’s inauguration on January 20 and his flurry of executive orders (see table by Barclays and the Economist’s policy tracker in Econ/Invest #1 below) have drowned out Davos’ agenda and US corporate earnings, pushing the S&P 500 to an all-time high on Thursday.
Trump’s day 1 agenda, which focused on immigration, energy, climate, and diversity policies, stopped short of imposing immediate tariffs on Canada, Mexico, and China Instead, he ordered his government to conduct specified trade reviews by April 1, reflecting his transactional approach. Bloomberg estimates that the baseline average tariff as a percentage of total goods imports could reach 8% compared to about 3% currently.
Trump publicly pushed global central bankers to cut rates, Saudi Arabia to lower oil prices, and threatened with tariffs unless foreign companies invest in the US (see Econ/Invest #2).
Still, there was no mass deportation of immigrants and little mention of tax cuts beyond those announced in the Tax Cuts and Jobs Acts which brought relief and a rally in the world markets. The MSCI EAFE Index rose 3.2% this week (YTD 4.4%), outperforming the S&P 500 at 1.7% (YTD 1.7%). US January jobless claims were also in line at 223k.
From two weeks ago, the US 10-year government bond rallied 14bp to 4.62%, the VIX declined 4.7% to 14.85% while the dollar and oil (WTI) dropped 2% and 2.5% respectively. For the past week, oil (WTI) declined the most (-4.1%) among major asset classes (See Weekly Change Table).
Also announced was the $500 billion Stargate project among Open AI, Oracle, Softbank, and MGX (UAE government) to build out US AI infrastructure (note that this is all private money and the initial deployment will be $100 billion to build a data centre in Texas).
McKinsey estimated global demand for data centre capacity would be over threefold by 2030, growing between 19% and 27% annually. The capacity will have to double what has been built since 2000.
In contrast, Europe has been underinvesting and overregulating in AI, adding to the urgency for its leaders to re-examine their growth-limiting AI policies due to data privacy and deal-making restrictions.
The gap between the S&P 500 valuation (based on forward P/E) and those of the Stoxx 600 (Europe) and the FTSE 100 (UK) is now the widest (see the top chart).
While the market looks at the S&P 500 forward PE versus the US 10-year bond yield and worries the equity risk premium has dropped below zero, we believe based on market expected earnings growth, dividend payout, and profitability, S&P 500’s equity risk premium is currently at about 2.9%, not negative. US stock valuation has been justified by the companies’ relatively faster revenue growth, margin expansion, and rising multiples.
Elsewhere, the Bank of Japan hiked its base rate by 25bp to 0.5%, citing rising inflation and wage growth and on track with its projections. Its core CPI expectation for 2025 and 2026 is 2.1%, which means the current real interest rate is still too low.
The market focus next week will be on the FOMC meeting. The Fed is widely expected to be on hold (despite favourable wage and core inflation data) most likely because the Fed is worried Trump’s policies will fuel inflation in the future.
Economists, as surveyed by Wall Street Journal in January, did not see inflation back to 2% by 2029 (averaging 2.7% in 2025) while economic growth is seen to be more robust (2.5% annualised in Q4 2024 compared to 1.7% projected in October.)
This coming week, we will monitor the US FOMC interest rate decision and Chairman Powell's press conference on Wednesday, December personal spending and core PCE on Friday, the Euro Area Q4 real GDP, the ECB rate decision and press conference on Thursday, and China’s January NBS manufacturing PMI on Monday. Big tech earnings will also be in focus this coming week.
Economy and Investments (Links):
The First 100 Days of Donald Trump's Second Term {Tracker] (The Economist or via Archive)
Trump’s New Economic War (FT or via Archive)
Saudi Arabia and other producers must cut oil prices, global central banks “immediately” needed to slash interest rates, and foreign companies must ramp up investments in US factories or face tariffs. The EU — which came in for particular opprobrium — must stop hitting big American technology companies with competition fines…
“He’s weaponising everything: trade, tax and energy. I’m worried that finance will get weaponised too,” says the head of one of the world’s largest sovereign wealth funds. “Most people are betting that he cares about the stock market — that’s the only check. That and the fact that he has said he wants to be a peacemaker.”In the ‘Great Stay’ Economy, Americans Feel Stuck (The Washington Post or via Archive)
This is a weird time for the U.S. economy. On the surface, it’s humming. Unemployment is a low 4.1 percent, growth is strong, consumers are spending, start-ups are booming, and inflation has cooled. But many Americans are finding it difficult to change jobs. Hiring is anemic, and companies are giving fewer bonuses and promotions. Moving is nearly impossible because so few homes are for sale, and no one wants to trade their 3 percent mortgage rate for 7 percent. Americans are even keeping their cars for record amounts of time. All of this is part of a phenomenon that has been dubbed the “Great Stay,” where people feel cemented in place.
Finance/Wealth (Link):
The Future of Cash (Chris Skinner)
Chris’ main points are there are 3 tiers of demographics—the tech-savvy cryptocurrency adopters, those who prefer stable coins and government-issued digital currencies, and those who trust only cash (due to its anonymity, which few digital alternatives can replace). The Pandemic has hastened the shift from cash to digital wallets, but debate about privacy and trust in digital currencies remains rampant. The future will be “a mix of national currencies for physical transactions and cryptocurrencies for digital transactions.”
+ You Can Own Elon Musk’s SpaceX. But At What Price? (The Wall Street Journal)
…if you want to find out whether you’re paying a fair price, good luck with that.
This matters not just to people who want to invest in SpaceX, but to anyone who’s being pitched nontraded or “alternative” assets through ETFs. The stock and debt of private companies is nowhere near ready for continuous trading in public markets. SpaceX shows why.
Wellness/Idea (Link):
Your Body’s Most Underrated Muscle Is Crying for Help Right Now (Kristie Leong, M.D. on Medium)
The way to fire up your soleus is to do a certain exercise, one that you can do while sitting at your desk. This exercise is the next best thing to getting up and walking around. If you can do that, it’s your best option, but when you can’t, here’s your fallback.
It’s called the soleus push-up, and you can do it right now. Just lift your heel while keeping your toes on the ground, then let it drop back down. That’s it. No fancy equipment, no gym membership, no spandex required.
One Chart You Should Not Miss: The Best European Stock Market in 2024
While Germany had been battling with recession, high energy costs, and a coalition which fell apart in 2024, DAX, its main stock index, returned 12% in dollar terms, outperforming the rest of Europe.
One major reason is SAP, the biggest stock (16% in weight) in DAX and the software company that integrates AI tools and partners with Microsoft, Meta, and Nvidia, returned 70% last year, contributing two-thirds of the DAX returns.
One Term to Know: Hedge Funds Fees: Two and Twenty
With over $4 trillion under management, hedge funds are private funds and part of the alternative investment universe. They pool investors' money. Their strategies range from long-biased, long-short equities, relative value, multi-strategy, macro, theme-based, country-focused, event-driven, quantitative, and activist.
Hedge funds use leverage (borrowed money), short-sell securities (for hedging), use derivatives, and have monthly or quarterly liquidity (period of redemption). Sometimes, money can be locked up for years. They are sold to accredited investors only and have a minimum entry point.
The “Two and Twenty” hedge fund fees refer to a 2% management fee earned on the assets under management and a 20% incentive fee on the profits above a certain benchmark, called the hurdle rate. The incentive fees often can only be paid if the fund’s net asset value exceeds its previous highest value, the high water mark.
LCH Investments has recently quantified the fees that have been paid to hedge funds compared to the total profits earned, and the expensive structure is as clear as ever:
Of the $3.7 trillion in profits they have earned as an industry since 1969, nearly half or a staggering $1.8 trillion was gobbled up as fees, according to estimates by LCH Investments, a fund of hedge funds. With soaring assets, hedge funds have raised their charges to 50.4% of gains, up from the roughly 30% they earned until the early 2000s.
The story of hedge funds return has not been pretty.
Diversified hedge fund investing appears to have underperformed in modern (post-GFC) times. For the 15 years ending June 30, 2023, the HFR Fund-Weighted Composite Index had an annualized return of 4.0%. This compares to a 4.5% return for a blend of public market indexes with matching market exposures and similar risk, namely, 52% stocks and 48% Treasury bills.5 By this measure, the hedge fund composite underperformed by 0.5% per year (CFA Institute)
[🌻] Things I Learn About AI/Productivity:
NotebookLM’s New Secrets to Supercharging Your Success (Full Tutorial – 2025) (Kevin Stratvert)
From creating YouTube videos, speeding up learning with quiz and study guides, interacting with reading materials, filing handwritten notes, to forming your board of advisors drawing from famous figures!
Chinese AI is Catching up, Posing a Dilemma For Donald Trump (The Economist or via Archive)
Microsoft AI Learning Hub (credit to
’s LinkedIn post)
Please do not hesitate to get in touch if you have any questions!
Please also check out my Conversations with female fund managers, wealth advisors, and more.
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