My Two-for-Tuesday morning train WFH reads:

• A Yale Professor’s Investment Formula Says You Need More Stocks. See How It Works. James Choi’s research suggests most investors are too conservative with their asset allocation — and he’s got the math to back it up. The formula incorporates income, risk tolerance and other factors absent from typical rules of thumb. (Wall Street Journal)

• Winners & Losers of SCOTUS Decision Striking Down Tariffs: The long-awaited Supreme Court decision on tariffs is finally out; it was a 7-2 decision in part, 6-3 decision more broadly. The street doesn’t quite understand the subtle nuances of the case. Take a moment to step back and consider the winners and losers of tariffs. (The Big Picture) see also Part II: IEEPA Tariff Ruling’s Losers: In broad strokes, the winners were the large companies that filed for refunds or sued the US, the dollar, consumers, the separation of powers, the US Constitution, and the Supreme Court. The losers are a bit more nuanced: some are obvious, many are not. (The Big Picture)

•  Inflation May Have Cooled, But Affordability Is Still a Hot Issue: The headline inflation numbers look better. The lived experience of buying groceries, paying rent, and filling a gas tank does not. (Bloomberg)

• Pros and Cons of Artificial Intelligence: We’re in the fun phase of AI innovation — tons of overreactions, wild predictions, and nobody really knows what happens next. A balanced look at what’s real and what’s hype. (A Wealth of Common Sense)

• The Ultra-Rich Are Different from You and Me: The billionaire class doesn’t just have more money — they operate in an entirely different economic and political reality, one that’s increasingly detached from everyone else’s. (Paul Krugman) see also Billionaires Gone Wild: Since Citizens United, billionaires’ share of political contributions exploded 1700% even as their numbers only grew 85%, making the oligarch power grab the defining feature of American politics. Their power grab is a dire threat to American democracy. (Paul Krugman)

• The giant void of nothingness where US financial regulation used to sit: The regulatory apparatus that once policed Wall Street has been hollowed out. What’s left is mostly a void — and the markets know it.‘There has never been a better time to be a crook’ (Financial Times) see also Crypto super PACs have hundreds of millions ready to spend on the midterms: The crypto industry is gearing up to pour enormous sums into the 2026 midterm elections, hoping to lock in favorable regulation before the window closes. With Trump faltering and their policy agenda incomplete, the crypto industry has moved at least $288 million toward the midterms in a desperate bid to keep Republicans in control of Congress. (Citation Needed)

• Inside the Gay Tech Mafia: Gay men have long been rumored to run Silicon Valley. WIRED investigates. (Wired)

• Judges Grow Angry Over Trump Administration Violating Their Orders: At least 35 times since August, federal judges have ordered the administration to explain why it should not be punished for violating their orders in immigration cases. (New York Times)

• Trader Joe’s wines are sneaky good. Here are 9 budget bottles to try.: The cashier did a double take at the $200 total. But dollar for dollar, Trader Joe’s wine selection punches well above its weight class. (Washington Post)

• Dilbert Creator’s AI Resurrection Not So Comic for His Family: Scott Adams is being digitally resurrected via AI video — and his family is not amused. The line between tribute and exploitation keeps getting blurrier. (The Bulwark)

Be sure to check out our Masters in Business interview this weekend with Hilary Allen, Professor of Law at the American University Washington College of Law. She specializes in financial regulation, banking law, securities regulation, and technology law, with a particular focus on how new financial technologies like fintech, crypto, and AI intersect with financial stability and public policy.

 

Concentrated Markets? Not true We are seeing the broadest rally in history.

Source: @RyanDetrick

 

Sign up for our reads-only mailing list here.

 

The post 10 Tuesday AM Reads appeared first on The Big Picture.

 

 

Soon after the Supreme Court dropped its IEEPA decision Friday morning, I wrote up a post on who the IEEPA decison Winners were. Today, as promised, we review the losers. Spoiler alert: there are a lot of them.

In broad strokes, the winners were the large companies that filed for refunds or sued the US, the dollar, consumers, the separation of powers, the US Constitution, and the Supreme Court. The losers are a bit more nuanced: some are obvious, many are not.

My analysis of who won and who lost is based on both the immediate reaction to the tariffs being found unlawful, and the longer-term results of this case. As always, the world is complex and not black-and-white, with much nuance to be found.

Let’s jump right in:

LOSERS

• Consumers:  On Friday, my immediate reaction was that US consumers would have a lower tariff burden. But the President added a 10% (150-day) global tariff, and then raised it over the weekend to 15%.

15%. This regressive Trump Tax will be borne by every consumer on a wide range of imported foodstuffs, manufactured parts, and finished goods. It is much less of a victory than I originally believed due to the latest tariffs POTUS imposed.

• U.S. Equities: What should have been a clear victory for US equities has turned into a muddled mess. (See chart at top). Blocking the president’s power to arbitrarily tariff any country any amount is a significant win; it was offset by the President’s immediate use of Section 232 to impose 10% 15% tariffs for 150 days. While Markets rallied right after the decision, they reacted negatively to the president’s actions over the weekend.

¶ Commodities (especially Gold & Silver): If the dollar was the big winner Friday, then anything priced in dollars is the loser. As noted, 2025 – just like 2017 before it – was a bad year for the dollar What’s been driving the dollar lower has been frustration from our trading partners, the repatriation trade, and a spreading concern that the United States is no longer the reliable ally it once was.

• Domestic automakers: Ford and GM have seen their stocks rise over the past year, but they have been underperforming the industrials and the broader market lately. Aluminum & Steel tariffs have made their cars more costly; other non-IEEPA tariffs1 affecting automobiles were not before the Court.

• Bonds & Deficits: If you believe that the bond market does not like unfunded spending, then it’s hard to see how bonds are not at least modest losers post SCOTUS decision. Tariffs are taxes that raised nearly $200 billion. While nobody here wanted a VAT tax, it did affect government revenues.

On a related note, in the first year of his second term, President Trump added $2.25 trillion to the national debt. His claim was that tariffs would help balance the budget, notwithstanding the Constitution – and that claim is no more.

 

….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN

— Donald J. Trump (@realDonaldTrump) December 4, 2018

Tariff Man: Trump has largely defined his presidency by promoting the benefits of tariffs. Alongside tax cuts and deportations, it is this administration’s signature policy. It’s not surprising that the Supreme Court’s rejection has sparked a wide range of reactions. At one end, Hakeem Jeffries called the tariff ruling a “crushing defeat for the wannabe King”; at the other, U.S. Trade Representative Jamieson Greer described tariff policy as “unchanged.”

The truth lay somewhere in between.

It was a frustrating defeat for POTUS, one that led him to lash out at Justices, Democrats, trading partners, and others. (Tomorrow night’s State of the Union address could become unhinged). Regardless, it was a significant loss with consequences that have yet to be fully determined.

• Tariff benefits:

The other thing we learned was that none of the promised benefits of tariffs have materialized:

“It’s the most beautiful word in the dictionary, and it’s my favorite word. It will make our country rich. Tariffs cost Americans nothing, it’s not going to raise our inflation. If I’m going to be president of this country, I’m going to put a 100%, 200%, 2,000% tariff. We’re going to generate hundreds of billions in tariffs; we’ll become so wealthy we won’t know how to spend that money.” 2

Every economist not named “Navarro” had previously forecast this…

• Foreign Policy: The single biggest hammer the president had has been taken away: His ability to single out specific countries and then impose unlimited tariffs (100%) is no longer.

The NYTimes blew this one: “They Did Deals With Trump to Get Lower Tariffs. Now They Are Stuck.”

A naïve headline that is laughably wrong. Nobody who was strong-armed into a deal based on unlawful tariffs is going to honor those deals. (Good luck enforcing them in the court of international trade).

These deals will be slow-walked, empty-gestured, let-me-get-back-to-you, and ultimately ignored.

• Congress: While the Constitution, the Supreme Court, and the separation of powers were victors on Friday, the subtle loser in our system was Congress. They had the ability – indeed the obligation – to push back on the executive branch’s power grab. The failure to stand up to the President’s overreach was a self-own. Their timidity allowed the bully to take what was rightfully theirs: the power to tax.

• Sycophants: There are numerous people who have thoroughly embarrassed themselves throughout the tariff regime3 but one stands out above them all: Brett Kavanaugh.

I could criticize Gorsuch’s concurring opinion as an unneeded performative treatise running 46 pages, only to ultimately agree with Chief Justice Roberts.4

But really, it is Kavanaugh whose dissent will be remembered. It fell somewhere in between embarrassing and sycophantic, fluffy and nonsensical.5 He spends 61 pages telling President Trump he won: “Although I firmly disagree with the Court’s holding today, the decision might not substantially constrain a President’s ability to order tariffs going forward, because numerous other federal statutes authorize the President to impose tariffs and might justify most (if not all) of the tariffs at issue in this case.”

Then Kavanaugh – and let me remind you, this is a sitting Supreme Court Justice, and not a junior lawyer in State or DOJ – helpfully lists the alternative statutes (Section 232, 122, 201, and 301 of the Trade Act) as a roadmap for the administration to use to reinstate tariffs in other ways. (Which they did)

The supposed intellectual heir to Scalia brand of conservatism was revealed as neither. Legally incoherent, intellectually indefensible, and blatantly partisan, Kavanaugh did not write a dissent, but rather, a very long op-ed, or if you want to be less charitable, a loyalty oath dressed up in judicial robes.  It will likely haunt the rest of his judicial career.

 

Previously:
Winners & Losers of SCOTUS Decision Striking Down Tariffs (February 20, 2026)

 

 

__________

1. Passenger vehicles, Light trucks, Medium‑ and heavy‑duty vehicles, and buses are all covered by a separate Section 232 tariffs, as are auto parts, including engines, transmissions, key electrical components, etc.

2. A few assorted dates of quotes:

The word tariff is the most beautiful word in the dictionary” -2018
“[They]will make our country rich” -2019
“Tariffs cost Americans nothing.” -2019
“The word ‘tariff’ to some people, and not very smart people, but to those people tariff is a dirty word. To me it is not a dirty word, it’s the most beautiful word there is.” Sept 15, 2024 (KNTV‑13, Las Vegas interview):
“It’s not going to raise our inflation.” -2024
“To me the most beautiful word in the dictionary is tariff. And it’s my favorite word.”-2024
“If I’m going to be president of this country, I’m going to put a 100%, 200%, 2,000% tariff. They’re not going to sell one car in the United States.”  -2024
“The higher the tariff, the more you’re going to put on the value of that piece, those goods, the higher people are going to pay in shops.”  -2024
“Tariffs are going to make us rich as hell, it’s going to bring our country’s businesses back that left us.” -2025
​“We’re going to generate hundreds of billions in tariffs; we’ll become so wealthy we won’t know how to spend that money.” -2025

​3. Lots of sycophants deserve at least a footnote:

Robert Lighthizer: U.S. Trade Representativewho was the key architect and executor of Trump’s tariff strategy

Peter Navarro: The one economist in the country who thought this wasa good idea.

Kevin Hasset: The uniquely unqualified adviser, who, despite multiple sources that correctly identified consumers as shouldering the burden for the Trump Tax, threatened NY Fed researchers for using data toshow the same. Thus, the author who wrote Dow 36,000, the most embarrassing financial book ever written, has another bit of ignominy to add to his resume.

4. Gorsuch: “Whatever else might be said about Congress’s work in IEEPA, it did not clearly surrender to the President the sweeping tariff power he seeks to wield.” WTH dude, 46 pages for THAT?

5. I don’t want to spend too much time on the structural issues with Kavanaugh’s dissent, but here are 3 problems.

1) He simultaneously argues the president has this power under IEEPA, but that the major questions doctrine shouldn’t apply in foreign affairs, and even if the court disagrees, the president has alternative authorities that make the decision moot. That’s not a coherent jurisprudential position — it’s kind words to an upset client.

Second, 61-pages?

Third, and most damning is that Kavanaugh, who supposedly is committed to judicial restraint and textualism, advocates in his dissent for (a) maximally expands executive power against the clear weight of the statutory text, (b) gave explicit political cover to route around the ruling,

 

The post Part II: IEEPA Tariff Ruling’s Losers appeared first on The Big Picture.

My snowed-in-Nor’easter-Blizzard WFM morning reads:

• Amazon takes the No. 1 spot on the Fortune 500, ending Walmart’s 13-year run. Amazon finally overtook Walmart atop the Fortune 500, a coronation for the company that essentially invented e-commerce and now dominates 40% of U.S. digital retail. It figured out how to develop a practical, easy way to shop online and take it mainstream. The Seattle company now dominates the U.S. market — 180 million Americans have a Prime account. But Amazon didn’t overtake a rival with a 32-year head start by remaining wedded to one line of business or following one approach to running it. (Fortune)

• Hedge fund Saba offers to buy stakes in Blue Owl funds at steep discount: Boaz Weinstein’s Saba Capital is making an aggressive play for Blue Owl fund stakes, offering to buy them at a significant markdown, as private credit group is seeking to shore up investor confidence  (Financial Times) see also Boaz Weinstein Is Hunting Blue Owl’s Funds: The hedge-fund manager is adding private credit to his crusade against funds sold to individual investors. (I am always interested when the manager who discovered the London Whale and beat Blackrock’s proxy spots a problem elsewhere). The activist hedge fund manager is circling Blue Owl’s closed-end funds, looking for discounts and willing to fight for them. (Wall Street Journal)

• The Reign of the Dollar Is Coming to an End. What Investors Can Do About It. The dollar’s dominance as the world’s reserve currency is eroding — slowly, then perhaps all at once. How to position portfolios for the shift?Consider investment in foreign stocks and debt juiced by a falling dollar.  (Barron’s)

• How Zoning Won: In 1926, the Supreme Court’s Euclid decision enshrined zoning in US cities. At 100 years old, Euclidean zoning — the system that separates homes from businesses from industry — the landmark ruling’s mixed legacy has become America’s most durable and least questioned land-use policy. It may finally be overdue for reform. (Bloomberg)

• Stock Slide and Slow Sales: What’s Happening in China’s E.V. Market? The Chinese EV juggernaut is showing cracks — slowing domestic sales, falling share prices, and a price war that’s squeezing margins across the board. Investors are selling shares of Chinese E.V. companies, concerned that intensifying competition and shorter production cycles mean the years of easy growth are over. The global implications for legacy automakers and battery supply chains are significant. (New York Times)

• How Hamilton Lane extracted more money from its ‘NAV squeezing’ The FT digs into how one of private equity’s biggest players is gaming NAV lending to juice returns. If you don’t understand the plumbing, you’re the one getting squeezed. It’s a good example of what can happen when private capital firms seek to tap less sophisticated retail investors to replace retrenching institutional investors — something that even some industry insiders warn will end in tears — in an era where many financial watchdogs are being neutered. (We read proxy statement so you don’t have to). (Financial Times)

• The Media Can’t Stop Propping Up Elon Musk’s Phony Supergenius Engineer Mythology: “CEO said a thing!” journalism is now utterly pervasive, and includes parroting billionaire and CEO claims with a total disregard for whether or not anything being said is actually true. The press keeps treating Musk as a hands-on engineering visionary. The evidence overwhelmingly suggests otherwise. (Karl Bode)

• ‘Is university still worth it?’ is the wrong question: UK graduates are struggling — but the real issue isn’t whether degrees have value. It’s that the economy has fundamentally changed around them. The graduate earnings premium isn’t really measuring what most people think. (Financial Times)

• Look how much Canadians hate the United States now: It’s not just about the trade war. Nearly half of America’s neighbors to the north now think the U.S. is a bigger threat to world peace than Russia. Five charts showing the dramatic collapse in how Canadians view their southern neighbor. The damage to the relationship may be lasting. (Politico)

• The Multibillion-Dollar Foundation That Controls the Humanities: The Andrew W. Mellon Foundation’s $540 million in annual grants wields near-monopolistic power over humanities scholarship. Is it the last best hope for American arts and letters—or is it killing them? (The Atlantic)

Be sure to check out our Masters in Business interview this weekend with Hilary Allen, Professor of Law at the American University Washington College of Law. She specializes in financial regulation, banking law, securities regulation, and technology law, with a particular focus on how new financial technologies like fintech, crypto, and AI intersect with financial stability and public policy.

 

The giant void of nothingness where US financial regulation used to sit

Source: Financial Times

 

 

Sign up for our reads-only mailing list here.

 

 

The post 10 Monday AM Reads appeared first on The Big Picture.

Avert your eyes! My Sunday morning look at incompetency, corruption and policy failures:

• Jeffrey Epstein Was Vladimir Putin’s Wealth Manager, FBI Source Claimed in Newly Released Epstein Files: Unsealed evidence related to the billionaire sex offender includes testimony from a “confidential human source” about Epstein’s business dealings, including a source claiming Epstein managed money for Putin — adding yet another layer to an already staggering web of connections. (People)

• Trump Lost on Tariffs, but Trade Will Never Be the Same: The Supreme Court’s ruling Friday that most of his tariffs are illegal has given the world a glimpse of U.S. trade policy long after Trump has gone. It will be more orderly and less chaotic, less driven by impulse and vendetta, more discriminating between allies and adversaries. Even with the Supreme Court striking down his authority, Trump has permanently shifted how the world thinks about American trade commitments. The damage is done. (Wall Street Journal) see also Get Ready for Zombie Tariffs: The Supreme Court may have struck down Trump’s tariff authority, but the economic distortions they created aren’t going away anytime soon.  Even after losing at the Supreme Court, Trump has plenty of ways to reconstruct his trade regime. (The Atlantic) see also Trump’s Tariffs Aren’t As Dead As You Think They Are: The Supreme Court ruling was a blow, but the president has other statutory tools and a team of lawyers already working around the decision. (Slate)

• The Man Who Wasn’t There: How an embittered Brit decimated the Washington Post. “He had two settings: charming Brit and asshole Brit. And he quickly moved into the latter category,” a former Post staffer tells me. “He was just like, ‘Fuck the feelings of the newsroom,’” an executive at a rival media organization says. “He was just going to plow through and get his job done for his boss.” (New York Magazine)

• US Brain Drain Threatens Scientific and Biopharmaceutical Leadership: The United States, once the world’s premier destination for scientific talent, now faces a growing risk of brain drain. After major cuts to federal research budgets, hiring freezes across universities, and the termination of key programs, many researchers—especially early-career scientists—are looking abroad. A recent Naturesurvey found that more than 75 percent of U.S.-based scientists are considering leaving the country, most commonly for Europe or Canada. Among early-career researchers, the share was even higher—nearly 80 percent. (Information Technology & Innovation Foundation)

• Revealed: How Substack makes money from hosting Nazi newsletters: Site takes a cut of subscriptions to content that promotes far-right ideology, white supremacy and antisemitism. (The Guardian)

• Meta’s Smart Glasses Are Wreaking Havoc in Schools Across the Country. It’s Only Going to Get Worse. As the discreet wearable cameras become more popular, students are saying they feel constantly watched and harassed—and professors are reshaping their classrooms in response. Students are using Meta AI glasses to cheat on exams and surveil classmates, forcing schools to ban wearable tech entirely. (Slate)

• ‘Deliberate targeting of vital body parts’: X-rays taken after Iran protests expose extent of catastrophic injuries: Expert analysis of images from one hospital suggests severe trauma to the face, chest and genitals was caused by metal birdshot and high-calibre bullets. Smuggled medical scans reveal Iranian security forces shot protesters at close range, deliberately targeting vital organs. (The Guardian)

• Triad: What I Saw at the Battle of Minneapolis The national media has moved on. Minnesota is still under siege. A first-person account of ICE enforcement operations in Minneapolis and the community resistance that followed. (The Bulwark)

• He made a fake ICE deportation tip line. Then a kindergarten teacher called. A Nashville comedian’s deportation hotline, set up as a joke, has gone viral among viewers who say it shows the “banality of evil personified.” Something darker than its creator expected: real people, in real fear, trying to report their neighbors. (Washington Post)

• DOJ Deleted Record Revealing That Maxwell Holds Potential Blackmail Over Trump: A DOJ filing was quietly scrubbed from the record — one that referenced Ghislaine Maxwell’s leverage over unnamed powerful figures. The document, which was re-posted after removal was reported, shows Maxwell’s lawyers possess three FBI interviews with an underage Trump accuser that haven’t been released to the public.  (Substack) see also DOJ Removed Record of Multiple FBI Interviews with Underage Trump Accuser, Epstein Data Shows: The FBI spoke at least four times with a woman who credibly accused Trump of sexually assaulting her when she was a minor, Epstein files show. That document is no longer accessible on the DOJ website. An independent analysis of the Epstein files reveals that records of FBI interviews with a minor who accused Trump were scrubbed from the DOJ’s database. The question isn’t just what happened — it’s who authorized the deletion. (RC Sollenberger) see also The Accomplice Who Was Going to Testify Against Jeffrey Epstein—Then Went Dark: French model scout Jean-Luc Brunel was negotiating to provide prosecutors with evidence against the sex offender in 2016—three years before he was finally arrested—but ultimately backed out. (Wall Street Journal)

Be sure to check out our Masters in Business interview this weekend with Hilary Allen, Professor of Law at the American University Washington College of Law. She specializes in financial regulation, banking law, securities regulation, and technology law, with a particular focus on how new financial technologies like fintech, crypto, and AI intersect with financial stability and public policy.

 

A child born in Spain or Italy can expect to live more than five years longer than a child born in the United States, despite the latter spending a far larger share of GDP on healthcare

Source: @Isabel_Schnabel

 

Sign up for our reads-only mailing list here.

~~~

To learn how these reads are assembled each day, please see this.

 

The post 10 Sunday Morning Reads appeared first on The Big Picture.



 

 

This week, I speak with Hilary Allen, a Professor of Law at the American University Washington College of Law. She teaches courses in Banking Law, Securities Regulation, and Business Associations. She also was a staffer on the Financial Crisis Inquiry Commission. We discuss financial stability regulation and new financial technologies including crypto and AI, and the role of venture capital in Silicon Valley. She has analyzed why some companies from the dot com era took hold, while others failed.

Her book on the problems deregulated tech monopolies are causing, “Fintech Dystopia,” is published free online.

A list of her current reading/favorite books is here; A transcript of our conversation is available here Tuesday.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Jeff Chang, cofounder and President of VEST. The firm manages over $55 billion in client assets in various “Buffered” and “Target Outcome” strategies. The Y-Combinator backed firm launched in 2012, pioneered the approach to portfolio construction built on defined outcomes and engineered certainty.

 

 

 

Published Book Fintech Dystopia Current Reading/Favorite Books

 

 

 

Books Barry mentioned

 

 

 

 

The post MiB: Hilary Allen on Fintech Dystopia appeared first on The Big Picture.

The weekend is here! Pour yourself a mug of Danish Blend coffee, grab a seat outside, and get ready for our longer-form weekend reads:

• This Entertainment Lawyer to the Stars Shares His Best Negotiating Secret: Allen Grubman on why you should always overtip and why the media business is always seeking fresh blood (Wall Street Journal)

• AI and the Economics of the Human Touch: A reason for optimism: Either AI is so useless that we are in the middle of a bubble that’s about to burst and take the economy down with it, or AI is so powerful it’s going to replace us all and devastate the labor market. (Agglomerations) see also What AI says about AI eating itself and the world… AI says it is targeting IT and software, finance, customer services, manufacturing and logistics, and media and entertainment The market gyrations of the past two weeks, as fears about AI disruption hit first software and then technology and financial stocks, have left anxious investors wondering: which sector will be next to drop? Deutsche Bank identifies an $800 billion AI funding gap and questions whether the industry’s unsustainable spending can continue. (Deutsche Bank Research)

• The economics of the Kalshi prediction market: Kalshi has operated as a federally licensed prediction market in the US since 2021, free from the strict stake limits placed on previous legal prediction markets. Over 300,000 analyzed contracts and their outcomes demonstrate that Kalshi’s contract prices are informative and improve in accuracy as markets approach closing, but they display a clear favourite-longshot bias. Low-price contracts win far less often than required to break even, while high-price contracts win more often and yield small positive returns. (VoxEU/CEPR)

• The Hidden Plumbing of Stablecoins: Financial and Technological Risks in the GENIUS Act Era US dollar stablecoins are increasingly used as payment and settlement instruments beyond cryptocurrency markets. With the enactment of the GENIUS Act in 2025, the United States established the first comprehensive federal framework governing their issuance, backing, and supervision. This paper evaluates the financial, technological, and regulatory risks that may arise as GENIUS-compliant stablecoins scale into mainstream use. MIT researchers identify systemic risks lurking in the GENIUS Act’s stablecoin infrastructure, from redemption surges to technological failures. (MIT Media Lab)

• In World War II’s dog-eat-dog struggle for resources, a Greenland mine launched a new world order: Greenland’s cryolite mine was strategically vital during WWII, shaping the postwar global order in ways still reverberating today. (The Conversation) see also  Hitler’s Greenland Obsession: The historical precedent for great-power interest in Greenland is darker than you think. The Atlantic on how the Third Reich saw the island as strategically vital — a useful reminder as present-day territorial ambitions echo uncomfortably. (The Atlantic)

• The New Rules of Retirement: Popular guidelines about how to save, invest, and spend need to be updated and personalized to ensure you’ll never run out of money. (Kiplinger)

• The Sweet Lesson of Neuroscience: Scientists once hoped that studying the brain would teach us how to build AI. Now, one AI researcher may have something to teach us about the brain. Brains teach themselves through internal steering systems, suggesting that the future of AI alignment might hinge less on learning rules and more on training signals—a frontier neuroscience still understands better than silicon. (Asterisk)

• The Cult Deprogrammer Who Needed Deprogramming: The long decline of religion has left a vacuum of purpose and belonging, then technology fragmented us further, and cults have flourished in this habitat, preying on a disillusioned public with promises of special knowledge, chosen membership, and a new dawn. When the mainstream feels broken, the fringe swoops in. As Antonio Gramsci said, “now is the time for monsters.” Rick Ross, America’s foremost cult deprogrammer, reflects on 40 years battling brainwashing in an era when conspiracy movements are doing the work that fringe groups used to do. (Minority Report)

• How one country stopped a Trump-style authoritarian in his tracks: What Brazil got right that America got wrong. Brazil’s Congress, Supreme Court, and military actively constrained Bolsonaro’s authoritarian impulses when he tried the moves Trump is now executing—showing that institutional resistance is possible. (Vox)

• The Rise and Fall of the American Monoculture: For most of the 20th century, pop culture was the glue that held the U.S. together. But what will it mean now that everything has splintered? Streaming and algorithms have shattered the shared cultural experiences that defined 20th-century America. (Wall Street Journal)

Be sure to check out our Masters in Business interview this weekend with Hilary Allen, Professor of Law at the American University Washington College of Law. She specializes in financial regulation, banking law, securities regulation, and technology law, with a particular focus on how new financial technologies like fintech, crypto, and AI intersect with financial stability and public policy.

 

Online spending is surging, at the expense of physical retail, driven by K-shaped consumer spending, rising BNPL usage and adoption of Agentic AI.

Source: Shruti Mishra, BofA Global Research

 

Sign up for our reads-only mailing list here.

 

The post 10 Weekend Reads appeared first on The Big Picture.

 

 

SCOTUS:  Article I, Section 8, of the Constitution specifies that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.” The Framers recognized the unique importance of this taxing power—a power which “very clear[ly]” includes the power to impose tariffs. Gibbons v. Ogden, 9 Wheat. 1, 201. And they gave Congress “alone . . . access to the pockets of the people.” The Federalist No. 48, p. 310 (J. Madison). The Framers did not vest any part of the taxing power in the Executive Branch. See Nicol v. Ames, 173 U. S. 509, 515.

–U.S. Supreme Court, February 20, 2026

 

The long-awaited Supreme Court decision on tariffs is finally out; it was a 7-2 decision in part, 6-3 decision more broadly (I thought this should have been 9-0 or 8-1, but…).

As we have seen in prior legal decisions with broad economic impact, the street doesn’t quite understand the subtle nuances of the case.1 Regular readers have seen my tariff criticism since Liberation Day (April 2, 2025); I have been tracking the case and thinking about the ramifications as it wound through the courts.

Rather than spike the football, I would rather take a moment to step back and consider the winners and losers of tariffs.

WINNERS:

• Consumers: There’s no way around it, but tariffs operate like a European VAT tax on consumers (minus free health care and college). The average American household has been paying ~$1,800 or more annually for tariffs; even more from wealthier families that account for nearly half of US consumer spending. The administration has been angry at people reminding consumers of this. 2

But the US Consumer is the big winner here. Assume about half of those few thousand dollars are no longer going to be a dragon their annual budgets.

The $5-7,000 tariff penalty on automobiles still exists, but at least other products may see higher prices ease.

• Companies that already filed for tariff refunds: Many of America’s largest companies have already filed for refunds. It is not all that simple or easy to demand a refund on paid tariffs – shepherding it through the process makes filing your taxes look easy. But many of the biggest retailers and manufacturers have already lined up for the nearly $200 billion in tariffs companies already paid. This will straight to the bottom line, as the consumers who willingly paid higher prices won’t see any of the cash refunds.

• The US Dollar: During 2025, the US Dollar fell 9.3%. The last time the US dollar fell this much was in 2017. Both years were the first year of a Trump Administration; each time there were substantial rises in tariffs, along with consternation from allies and trading partners, along with a modest repatriation of overseas investments in the United States.

Depending on how the White House responds, we could see the dollar’s decline slow and reverse itself over the course of the year.

• Neal Katyal: Obama’s former solicitor general argued and won the case at both the DC Court of Appeals and U.S. Supreme Court. His thoughtful approach to constitutional arguments have consistently carried the day. He has cemented his legacy as one of the most effective SCOTUS litigants of the modern era.

• Inflation: if tariffs are inflationary then the overturning of some or all tariffs should be disinflationary. The net impact on this going forward is positive for bonds. This might even clear the way for the Federal Reserve to have faster FOMC rate cuts.

• Separation of Powers, US Constitution: The plain language of Article 1, Section 8 reserves the power to tax, including levying duties and tariffs, to Congress. It’s not a big leap to suggest that this is the first time since January 20, 2025, that the US Constitution is the controlling factor in a major policy decision.

• Retailers, Manufacturers, and Consumer Discretionary: The biggest impact of the tariffs has fallen on several groups:

-Traditional Retailers:  Walmart, Amazon, Costco Target, Best Buy
-Home improvement: Home Depot, Lowe’s, IKEA, Williams‑Sonoma, etc.
-Appliance makers: Apple, Samsung, LG, Electrolux, GE Appliances, Lenovo
-Industrial Manufacturers  – Caterpillar, Deere, Polaris, Stanley Works, etc.
-Consumer discretionary –Lululemon, Nike, Revlon Luxottica
-Auto parts importers: Toyota, General Motors, Ford, Volkswagen, BorgWarner, Kawasaki, Goodyear, Yokohama Tire, etc.
-Food importers: Dole Fresh Fruit Co., Bumble Bee

That’s a short list; there are obviously hundreds more public companies and thousands more private ones that benefit from this ruling.

• Supreme Court: The past few years have not been kind to SCOTUS (although these have all been self-inflicted wounds). They have been mired in a kickback/gifts to sitting justices scandal; the lack of a standing, enforceable set of ethics rules is a disgraceful embarrassment. But the bigger issue has been a series of unconscionable and undefendable decisions. When partisan rulings remind constitutional law scholars of the Dred Scott “separate but equal” decision, the court has jumped the tracks.

There was every opportunity for the court to blow this decision ignore the plain written word of the constitution and the concept of separation of powers. It’s no surprise that Chief Justice Roberts, an institutionalist, wrote the lead decision himself, rebuking the president for his overreach.3

 

Coming later: The IEEPA Tariff Ruling’s Losers

 

 

 

 

Previously:
IEEPA Tariffs Update (January 27, 2026)

It’s Tariff Week! * (January 12, 2026)

Tariffs Likely To Be Overturned (November 5, 2025)

Might Tariffs Get “Overturned”? (July 31, 2025)

The Muted Impact of Tariffs on Inflation So Far (July 17, 2025)

Are Tariffs a New US VAT Tax? (March 31, 2025)

MiB: Special Edition: Neal Katyal on Challenging Trump’s Global Tariffs (September 3, 2025)

Neal Katyal on Challenging Trump’s Global Tariffs (September 8, 2025)

Which States Could Suffer the Most From Trade War Tariffs? (September 16, 2019)

 

 

 

__________

1. The usual pontificating pundits, whose track records leave much to be desired, have been breathlessly revealing their ignorance of all things jurisprudential. If you must preface your TV remarks with “I’m not a lawyer but” then perhaps you should pour yourself a tall glass of STFU and admit that you don’t know….

2. Companies like Amazon originally threatened to break out tariffs expenses in their displayed prices were met with wrath from the President; more recently, consider Kevin Hassett’s embarrassing hissy fit at independent New York Fed research that found consumers shouldered as much as 94% of the tariff expense.

3. It will be fun to watch the Justices sit in the front row of the State of the Union and suffer through Trump’s wrath. He won’t be able to help himself, and it could even mark an interesting moment in how things proceed.

The post Winners & Losers of SCOTUS Decision Striking Down Tariffs appeared first on The Big Picture.

My end-of-week morning train WFH reads:

• Netflix Calls Paramount’s Bluff: Netflix gave Warner Bros. a seven-day waiver to hear Paramount’s “best and final” offer, essentially daring David Ellison to put real money on the table or walk away. A masterclass in deal-making psychology — and a Godfather reference just waiting to happen. One week for both sides to show the actual cards here… (Spyglass)

• The 401(k) Takeover: Private Equity Muscles In on Retirement: Private equity firms are flooding into America’s $14 trillion retirement savings market, mirroring crypto’s 2024 election strategy to loosen regulations and gain access to ordinary workers’ nest eggs. Wall Street power players are squeezing into the US retirement industry. Its gatekeepers are succumbing. (Bloomberg) see also As Private-Market Momentum Continues to Grow, Market Infrastructure Improvements Rise Too: Private markets are exploding toward retirement plans, but the lack of unified infrastructure and transparency poses serious risks as retail investors get their first real taste of alternatives. Additional retail and retirement-plan demand are expected to broaden distribution of private markets, but they will also bring scrutiny and comparisons to public markets. (Chief Investment Officer)

• Billionaires’ Low Taxes Are Becoming a Problem for the Economy: Tax avoidance by the superwealthy is an economic issue as well as a political one. The top 1% now holds 32% of U.S. wealth while paying historically low tax rates, creating concentration risk that could crater the entire economy in the next market correction. (Wall Street Journal)

• The Quiet Architect of Trump’s Global Trade War: Jamieson Greer, a low-key lawyer from a working-class background, is rewriting the rules of the global economy at the president’s behest. (New York Times)

• This Viral AI Project Went From Side Hustle to Coveted Prize in Three Months: After a fierce competition between the biggest AI labs, OpenAI hired the creator of the viral OpenClaw personal AI assistant platform. A small AI project caught fire online and quickly drew acquisition interest. How the speed of AI development has compressed the startup lifecycle from years to weeks. (Wall Street Journal) but see The End of the Office?: Andrew Yang warns that AI will “disembowel” white-collar jobs within 12-18 months, potentially cutting the 70 million office workers by 20-50% and collapsing the entire ecosystem of downtown businesses that depend on them. “If you are one of the professionals who is likely to be affected, I’m sorry.” (Andrew Yang)

• How Paris’ working-class dining experience is reshaping restaurant economics in France:  Historic Parisian bouillon restaurants are back, proving that simple menus, volume purchasing, and fast table turnover can create sustainable, affordable dining—and inspiring a global rethink of restaurant economics. It was here that he dished up comforting yet simple, hot meals that wouldn’t burn a hole in even the most cash-strapped wallets of the likes of the workers at the local Les Halles wholesale market, formerly known as the “belly of Paris”, named after the title of the Emile Zola novel. (The Conversation)

• What just one alcoholic drink a day really does to your body: Even small amounts of alcohol can seriously affect your health if you drink daily. The “moderate drinking is fine” consensus keeps eroding. New research on what even a single daily drink does to your liver, brain, and cancer risk. (The Times)

• The US coup: one year on: The event that triggered my nervous system was Elon Musk’s DOGE illegally entering the US treasury and gaining access to the entire nation’s personal and financial data: a system-level hack on the entire US population. This was a power grab that could not be undone. Data is like a genie. It cannot be put back in the bottle. That one act – that was then replicated across the federal government – was the beginning of what I believed, still believe, is a technoauthoritarian state. (Carole Cadwalladr)

• How Olympic skier Hunter Hess gets his superhuman balance: Want to have better balance? You can learn a thing or two from one of the best freeskiers in the world. Olympic halfpipe skier Hunter Hess pulls off gravity-defying tricks because his proprioception is finely tuned—and experts explain how regular people can train the same balance skills with simple exercises. (Washington Post)

• U2 Propaganda Days of Ash: U2 surprise-released a politically charged six-track EP ahead of their 2026 album, with tracks about defiance, war, and lost lives that Bono said were “impatient to be out in the world.” ‘Six postcards from the present… wish we weren’t here’ In advance of a new album in late 2026, the new EP is a self-contained collection of five new songs and a poem – ‘American Obituary’, ‘The Tears Of Things’, ‘Song Of The Future’, ‘Wildpeace’, ‘One Life At A Time’ and ‘Yours Eternally’ (ft. Ed Sheeran & Taras Topolia) – an immediate response to current events and inspired by the many extraordinary and courageous people fighting on the frontlines of freedom (U2.com)

Be sure to check out our Masters in Business interview this weekend with Hilary Allen, Professor of Law at the American University Washington College of Law. She specializes in financial regulation, banking law, securities regulation, and technology law, with a particular focus on how new financial technologies like fintech, crypto, and AI intersect with financial stability and public policy.

 

Detroit Automakers Take $50 Billion Hit as EV Bubble Bursts

Source: Wall Street Journal

 

Sign up for our reads-only mailing list here.

 

 

The post 10 Friday AM Reads appeared first on The Big Picture.



 

 

At The Money: The Mega Backdoor Roth with Dan Larosa (February 19, 2026)

401(k)s top out at $24,500, but you can boost your tax-deferred investments to as much as $80,000 by switching to an IRS-approved Mega Backdoor Roth account.

Full transcript below.

~~~

About this week’s guest:

Dan LaRosa is Director of Corporate Retirement Plans at Ritholtz Wealth Management, overseeing more than $400 million in various plans. He is a Qualified Plan Financial Consultant (QPFC) and Accredited Investment Fiduciary (AIF) and partner at the firm.

For more info, see:

Professional Bio

LinkedIn

~~~

 

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

 

 

 

At the Money with Barry Ritholtz

Guest: Dan LaRosa — The Mega Backdoor Roth

 

 

 

Transcript:

 

Barry Ritholtz: Tax-deferred portfolios, also known as qualified accounts, have become one of the most popular ways to invest. There are about a hundred million households, nearly 75% of every household in America with some sort of a formal tax advantaged retirement savings, total defined contributions are nearly $14 trillion.

The latest edition in your tax-deferred portfolio choices is the Mega Backdoor Roth.

To help us unpack all of this and what it means for your retirement savings, let’s bring in Dan LaRosa. He’s an expert in qualified retirement accounts and works with clients all over the country. And full disclosure, Dan leads the corporate retirement plans at my firm Ritholtz Wealth Management and is one of my partners.

So let’s start with the basics. Most of our listeners are certainly familiar with 401Ks, and they’re probably familiar with variations such as a Roth 401k, or a Roth IRA.

What is a Mega Backdoor Roth?

Dan LaRosa: So a regular 401k allows you to contribute up to $24,500 into it. The Mega Backdoor Roth feature allows you to contribute above the $24,500 limit, up to $72,000.

It uses the same type of strategy that you have in your regular backdoor Roth IRA. That’s just the way for high earners to get money into a Roth account. They’re gonna make a non-deductible contribution to a traditional IRA and then convert that to a Roth IRA. It works, it’s great, but the dollar amount is pretty small, it’s $7,500.

The Mega Backdoor Roth uses this same strategy, but inside of your 401k plan, where the contribution limits are significantly higher.

Barry Ritholtz: So Mega-Backdoor-401k-Roth sounds kind of complicated, but it really seems like that’s a huge increase in your after-tax contributions that theoretically grow tax-free and are withdrawn tax-free. Is that right?

Dan LaRosa: That’s right. When it works and your plan allows it, it’s a cheat code. There’s nothing else out there that’s going to allow you to get that much Roth dollars into a qualified retirement account.

Barry Ritholtz: So cheat codes and back doors sound a little shady. Is this legit with the IRS? Have they blessed this?

Dan LaRosa: It’s just the backdoor part that sounds kind of sketchy. It is not a gray area. It is not a loophole. It’s completely legit. The rules are actually very clear. The real challenge is just whether or not your plan allows you to use it.

Barry Ritholtz: So let’s go through that. If the IRS says it’s kosher, I would imagine your employer or the benefits provider, maybe even the custodian — who has to sign off on it? Is it any of the above or all of the above? Whose approval is required?

Dan LaRosa: There’s really nothing to do with the custodian with this. It’s more of a plan-level decision that’s going to be made by the employer. They’re the ones that are going to control the plan design and would ultimately make the decision to offer the after-tax contributions and in-plan Roth conversion features that make up this Mega-Backdoor-Roth. The 401k provider is obviously involved and they need to be able to administer this, but that’s generally not a problem.

Barry Ritholtz: Typically $24,500 is a regular 401k. I’m assuming catch-ups and things like that are separate. If you could go to $72,000 in this and it’s after tax, why would the employer object? This sounds like a great deal for anyone who wants to throw more money into their 401k.

Dan LaRosa: And this feature has gotten a lot more popular in recent years, but the reality is the most likely answer as to why more plans don’t do it — it just doesn’t work for every plan. After-tax contributions and the in-plan Roth conversions do add some complexity to the plan design, and most importantly, they trigger additional compliance testing. And that extra compliance testing, if failed, can prevent the whole strategy from working altogether.

Barry Ritholtz: I know our plan in our shop offers this in-house, and I’ve been taking advantage of it personally. I’m thinking about other service companies — lawyers, accountants, advisors, architects, anybody that’s a white-collar office with reasonable salaries. It would seem that this should be something that all those people should take advantage of.

Why don’t all of these firms take advantage of it? It sounds like $72,000, it’s triple what you’re normally allowed. Why wouldn’t everybody jump on this?

Dan LaRosa: $72,000 is actually the total — that’s your all-in that each individual can get into each plan. But why don’t more plans or companies use this feature? Again, it just doesn’t always work.

Without getting too deep into the weeds on the compliance testing side, if the only individuals that are interested in using this feature and contributing — making these after-tax contributions — are the owners and highest wage earners, it’s not going to work. It’s as simple as that. So the company either has to be big enough or have enough wage earners where it’s just not the top 20% or so using it in order for it to work.

Barry Ritholtz: What does it typically look like in a firm that does this? What sort of buy-in do you need from management, as well as the rest of the staff or partnership?

Dan LaRosa: As far as buy-in from the staff, if you have a lot of employees that are contributing and maxing out. If you have a lot of people that are maxing their contributions and would do more if they could, that’s one good sign. It’s worth looking into in that situation. But you’ll also have to have enough highly compensated individuals. If you have 30 people and eight of them are the big wage earners, it’s just not gonna work. It’s gonna be top heavy. So if you have enough highly compensated individuals that are interested in using this feature, there’s a good shot it’ll work.

Barry Ritholtz: I immediately thought of professional services companies — financial advisors, attorneys, accountants, bankers, doctors, et cetera. But what sort of industries do you see use this? What sort of businesses is this really well-suited for?

Dan LaRosa: All the professionals that you just listed. Tech companies — I’d say just about all of the big tech companies have this feature available. And I think any industry or any company where a large percentage of the population would be considered high wage earners, meaning say over $150,000–$160,000 a year, and that are interested in making these significant contributions, it could work.

Barry Ritholtz: Let’s assume you have a traditional 401k and everybody is maxing out their $24,500 plus whatever catch-up over 50 years old, and they want to be able to save more money. What is the process like converting that to a Mega Backdoor Roth? Walk us through that process.

Dan LaRosa: Ultimately, it’s going to have to come from the employer. So whoever at the company is in charge of running and administering the 401k will need to be involved in that decision. If you’re an influential employee, of course you can try and influence and push on that decision, but ultimately the plan sponsor or the employer will work with the 401k provider to update the plan documents and add a couple of features.

For the Mega Backdoor Roth to work, a plan has to allow two things: The first is the ability to make after-tax contributions, and the second is a way to move those after-tax dollars into a Roth account. Moving the after-tax dollars into Roth can happen one of two ways. First, you have an in-plan Roth conversion where the after-tax dollars are converted to Roth and stay in the 401k plan. And the second is an in-service distribution where the after-tax dollars are rolled into an outside Roth IRA. In-plan Roth conversion is probably more common; it’s just simpler to execute and it keeps all the money inside the plan.

Barry Ritholtz: This is really attractive. I’m assuming someone reaches out to HR or one of the managing directors / partners (whatever the title is) and says, hey, this is a great opportunity, why don’t we do this? Is there an extra cost? Why would there be any reluctance to do this, assuming it’s the right sort of mix of high-wage employees?

Dan LaRosa: There is no additional cost. You could say there’s a little bit of an additional headache – you’re adding more complexity, another layer of compliance testing. Whoever is in charge of administering the 401k at the company; maybe it amounts to a little more work.

But when it works, it works really well. And the significant benefits far outweigh the minor additional administrative burden.

Barry Ritholtz: We’re talking about companies with partners and HR, etc. What about either a solo practitioner or a 1099 contractor? Can you do this sort of Mega Backdoor Roth if you’re self-employed?

Dan LaRosa: Yes, absolutely. Mega Backdoor Roth works perfectly for solo or owner-only 401k plans. There are no compliance tests and headaches or administrative burdens when the plan only covers owners.

Yes, we are huge fans of the Mega Backdoor Roth in solo 401Ks.

Barry Ritholtz: Let’s talk about timing. How does this work? How much are people converting? What does this look like in terms of best practices — either daily or each pay period or quarterly? How often does this occur?

Dan LaRosa: It really depends on the plan or on the plan provider. Some plans only allow a certain number of conversions or distributions each year, which is obviously not ideal. And it really shifts the burden onto the participant to figure out when and how to do that. Others have daily automatic Roth conversions, which is just awesome. I’ve done it both ways. I’ve had the once-a-year manual paper form after-tax conversions, and we now have the daily automatic Roth conversions with Fidelity, and it’s a game-changer. It’s great.

As an employee, you don’t have too much control over that. It really depends on the provider. But whatever the case, I certainly recommend reaching out to your 401k provider the first time you do this, the first time you convert, and making sure you get it right, do it the right way.

Barry Ritholtz: So you and I have talked about this in the past and you discussed automatic Roth sweeps. Is that something that gets set up by the provider or the employer or the employee? How do you make sure that each payroll period — or in the event of any distribution, profit share, or dividend — how do you make sure that it stays on the Roth side?

Dan LaRosa: That’s a great point. So that daily automatic Roth sweep or automatic Roth conversion is awesome, but only some record keepers, only some providers offer it. The answer, as it usually is with these types of plans, is “It depends.” Every plan is different, every provider is different.

If your plan offers it, or if you’re not sure, reach out to the 401(k) provider. If your plan does offer it, the employee generally has to activate this daily automatic Roth conversion feature.

Barry Ritholtz: All right, so I know my 401(k) is at Fidelity—all of these daily sweeps and other things — from my perspective, it was set and forget. I don’t have to pay much attention to it. What about some of the other big 401(k) providers — Schwab, Vanguard? Is it possible to do it with those, and do they allow for these daily sweeps? What’s the landscape look like out there?

Dan LaRosa: As this feature has become increasingly popular in recent years, which it certainly has, more providers are getting better at it. Five years ago, I don’t know if anyone outside of Fidelity did it. Now, certainly, if your plan is big enough, they’ll pretty much do whatever you want. I think Fidelity just happened to be the first to really excel at administering it, but other providers are catching up quickly.

Barry Ritholtz: Last question. People hear this described as “tax-free growth forever,” and obviously that gets people excited, but what are the risks? What scenarios does this not make any sense? Where are you just better off investing in a taxable account?

Dan LaRosa: I think the excitement is warranted. I’m a huge fan of the Mega Backdoor Roth feature. If your plan offers it and you can afford the extra contributions, my answer is usually do it.

Just keep in mind a couple of things. First, if you use that in-plan Roth conversion, the money stays in the plan and then follows the Roth 401k rules. So that means you generally can’t access that money until age 59 and a half or a distributable event. The biggest thing, to answer your question — when does a taxable account make more sense? If present-day liquidity is important.

Barry Ritholtz: What about Mega Backdoor Roths — is there the same required minimum withdrawal requirements?

Dan LaRosa: Actually, effective last year, the SECURE 2.0 Act removed the RMD requirement from Roth 401Ks. So there are no RMD requirements for a Roth 401k.

Barry Ritholtz: Really interesting.

If you are working in a firm or if you’re a solo practitioner and you’re making a decent amount of money, but you want to save more for retirement, the Mega Backdoor Roth allows you to use after-tax dollars up to $72,000 to put into this account that will not only grow tax free, but you can withdraw it tax free whenever you want after age 59 and a half, with no minimum requirements when you turn 73.

It sounds like a great opportunity and a lot of people just are unaware of it and are not taking advantage of it. You should look into this if you are in those circumstances and you have an employer who will work with you to create a better corporate retirement plan.

I’m Barry Ritholtz. You are listening to At the Money.

 

~~~

Find our entire music playlist for At the Money on Spotify.

 

The post At the Money: The Mega Backdoor Roth appeared first on The Big Picture.

My morning train WFH reads:

• The grift economy is going mainstream Scams and grift have evolved from fringe activity into normalized economic behavior, marking a fundamental shift in how cons operate in plain sight. (Your Brain on Money)

• Detroit Automakers Take $50 Billion Hit as EV Bubble Bursts: The Big Three face massive write-downs as EV demand collapses and companies redirect investment back to gas engines. (Wall Street Journal)

• Bitcoin’s plunge should end the hype that it is digital gold: Bitcoin’s 35% decline versus gold’s 70% gain puts the lie to the “digital gold” narrative. (The Hill)

• Why voters hate Trump’s (pretty decent) economy: The data is solid. The vibes are atrocious. What gives? Despite solid economic metrics, voters remain sour on Trump’s economy because costs for essentials like housing and groceries never came down, leaving real people worse off despite the headlines. (Vox)  see also The Disappointment of Young Trump Voters: Americans under 30 swung to the right in 2024, but they’re not getting what they voted for. Young voters who backed Trump in 2024 are abandoning him at record rates, disillusioned by unmet economic promises. (The Atlantic)

• Workers Are Afraid AI Will Take Their Jobs. They’re Missing the Bigger Danger. It isn’t whether artificial intelligence is going to replace them. It’s who will control the knowledge that companies capture from their employees. The real threat isn’t job replacement—it’s that companies are capturing every keystroke and interaction you make, then using that knowledge to automate you or sell it to your competitors. (Wall Street Journal)

• Why it’s becoming so expensive to buy a car in America: Prices are at record highs. More loans are going bad. It’s not an easy time to afford a new car in America. New cars now average $50K with $800+ monthly payments, driven by SUV-heavy tastes, tech complexity, and tariffs that automakers are absorbing—pushing bad loans to levels not seen since 2008. (Washington Post)

• Apple Decouples From Nasdaq, Offering Alternative to AI-Fueled Volatility: It’s been nearly 20 years since Apple Inc. was this untethered from its tech peers, giving investors an appealing alternative to the artificial intelligence-fueled volatility that has gripped most other corners of the stock market in recent weeks. Apple’s 40-day correlation to the Nasdaq 100 Index tumbled to 0.21 last week, the lowest since 2006, according to data compiled by Bloomberg. Apple’s stock becomes a haven from AI-stock whiplash, proving that sitting out the AI arms race is now a viable investment strategy. (Bloomberg)

• Why AI writing is so generic, boring, and dangerous: Semantic ablation: The AI identifies high-entropy clusters – the precise points where unique insights and “blood” reside – and systematically replaces them with the most probable, generic token sequences. What began as a jagged, precise Romanesque structure of stone is eroded into a polished, Baroque plastic shell: it looks “clean” to the casual eye, but its structural integrity – its “ciccia” – has been ablated to favor a hollow, frictionless aesthetic. When AI “refines” your writing, it’s not improving it—it’s erasing the rare, precise ideas and replacing them with statistical averages, stripping nuance and context in ways that spread misinformation. (The Register)

• The Republican Governor Getting Under Trump’s Skin: Oklahoma’s Kevin Stitt has weathered criticism from Trump ahead of a meeting of governors at the White House this week. The Republican chair of the National Governors Association, walked a tightrope defending Democratic governors’ invitation rights—and Trump wasn’t happy about it. (Wall Street Journal)

• Brooke Shields on Style, the New “Sex Sells,” and Returning to the Calvin Klein Fold: Forty years after those jeans ads, Shields is back with Calvin Klein — this time on her own terms, with thoughts on how sex in advertising has evolved. (Vanity Fair)

Be sure to check out our Masters in Business interview this weekend with Hilary Allen, Professor of Law at the American University Washington College of Law. She specializes in financial regulation, banking law, securities regulation, and technology law, with a particular focus on how new financial technologies like fintech, crypto, and AI intersect with financial stability and public policy.

 

Complete History of 2s/10s Yield Curve Inversions (1976–2026)

Source: Eco3min

 

Sign up for our reads-only mailing list here.

 

The post 10 Thursday AM Reads appeared first on The Big Picture.

 

 

“Let me tell you how this works:  A twenty-six-year-old quantitative analyst at a hedge fund in midtown Manhattan—a person who has never managed an employee, never sat across from a customer, never had to explain to someone that their position has been eliminated—opens a spreadsheet, sees that your company’s headcount is 14% higher than a competitor’s, and writes a note to institutional investors that your stock is overweight.

That note gets circulated and your stock drops. Your board panics. They call the CEO, who was hired eighteen months ago specifically to “unlock shareholder value,” a phrase that should be studied by future anthropologists as one of the great euphemisms of our time. An all-hands meeting is called. Two weeks later, 3,000 people get a calendar invite from HR titled “Quick Chat.”

This is the system working exactly as designed.”

 

No, this is not how this works.

I see this stuff all the time. Sometimes it’s a news item, or a Substack post, or a video clip that purports “a great truth” about markets and companies. Clients, friends, even family members who don’t work in finance share this with me (the excerpt above was from a Substack).

The implication: the system is somehow both already broken and fragile.

This is a fundamental misunderstanding of how markets operate, what drives stocks, and how information truly gets reflected in prices.

Let me explain why this is decidedly not how things work.

The information this 26-year-old analyst “discovered” is a simple ratio. It shows the number of employees relative to some other metric, such as revenue or profits. Assume it came from a well-known (trustworthy) data source. It’s available to various market participants: the 400,000 professionals who pay $3,000 per month for a Bloomberg Terminal; the near-professionals who subscribe to other databases or free versions available in broker research. You can even find variations on Yahoo Finance or Google.

Each of these participants has huge financial incentives to apply this analysis to their own portfolios. But they don’t, because of one simple reason: Zero edge. A widely reported ratio that every other investor has access to provides no advantage over other market participants with that same ratio.

It is already in the stock price.

When I was a newbie trader, it took me a good long time to understand why this is true – and indeed, could not be any other way.

All fundamental information that is widely distributed and/or well known by the investment community is already priced in. Hundreds of thousands of people are deeply incentivized to identify alpha — information that allows you to outperform the markets – and then to deploy capital based on that.

That already happened here.

What is the edge in the story above? What is the insight this “discovery” – and I believe it’s nothing of the kind – uniquely provides to this person?

There is simply no alpha in widely available information, such as an obvious, well-known, easily discovered ratio.

~~~

Let’s do a quick thought experiment:

Imagine the scenario outlined above was successful: what would happen if some inexperienced kid at some fund spotted an aberrational datapoint, wrote up a research note, took it public, which led to a hugely profitable trade?

What would happen next?

Some of you know exactly what would come next: Every fund would unleash every MBA in their shop (along with anyone half decent with Excel) to find the next version of that trade. No data point would go unnoticed, no ratio would sit unanalyzed, no possible combination of variables would remain untried. Any and every possible source of Alpha would be explored, war-gamed, backtested, and modelled.

If other trade possibilities like this one existed, someone would find it and act on it. Others would quickly follow. Soon, the “proper” alignment between these ratios would fall into place. Any upside would be thoroughly arbitraged away…

Markets are not perfectly efficient; I have described them as kind of sorta eventually efficient. I have yet to find anything that disproves this thesis.1

But as far as the major issues go — the big obvious things found in newspaper headlines, in any datapoint in every Bloomberg terminal, in the free research via brokers or online websites — you may safely assume that 98% of the time, it’s already in the price.

What is not in the price?

Many things, across many vectors:

-Genuinely new, unknown information. (FDA Approves new drug!)

-A unique analytical framework no one else has access to (Renaissance Technologies’ 3000 separate proprietary, unique trading algos)

-Insight into a product (The Cybertruck sucks!)

-Recognition of a deeply flawed business model (short Microstrategy!)

-Grasp of a market unknown (Rivian R2 is going to be a global bestseller!)

-Legal insight (SCOTUS will overturn Tariffs — retailers and industrials will benefit)

-Complex risk analysis (Securitized subprime mortgages are sure going to be problematic if rates go up!)

-Behavioral recognition of a crowd mania (Silver sure looks bubbly over $75 100!)

All of these and more can be sources of alpha. But they must genuinely be poorly known or misunderstood by the crowd, and acted on even less.

Good bets made by active traders and managers amid fierce competition look different than bets made on very publicly available information.

They tend to start with a variant perception versus crowd consensus; one where price was significantly impacted, and this perception hasn’t been acted on (yet), and hopefully remains that way until you establish your position. The crowd, correct most of the time (we call this a trend), is wrong in this instance; once it recognizes its mistake, it shifts away from what is now seen as an incorrect consensus and adjusts its portfolios accordingly.

Not all active players trade this way, but enough do. These great insights do not come along every day, but they occur frequently enough to entice an entire active segment of the market to consistently hunt for them.

And that 26-year-old spreadsheet jockey? He is going to need more than a simple headcount ratio to find any alpha…

 

 

 

Previously:
Tariffs Likely To Be Overturned (November 5, 2025)

The kinda-eventually-sorta-mostly-almost Efficient Market Theory (November 20, 2004)

 

 

 

__________

1. Indeed, even the Nobel Prize committee acknowledged this by recognizing in the same year both Eugene Fama for his efficient market hypothesis and Robert Shiller for studies of how bubbles develop and pop.

 

The post Not How This Works… appeared first on The Big Picture.

My mid-week morning train WFH reads:

• Integrity faces a critical moment of peril: Prediction markets like Polymarket lack insider trading regulation, allowing traders to profit from non-public information about real-world events. Any person can now share coherent, well-constructed views that don’t reflect their true ideas or beliefs — or that they barely understand themselves. (Axios)

• How to solve any problem: Human beings began to solve the ultimate problem, the giga problem, the problem of all problems: They solved the problem of how problems are solved. High agency comes from Guess-Test-Correct loops: theorize solutions, validate with experiments, iterate on findings. (High Agency)

• The 401(k) milestones everyone should hit ASAP — and next steps to take once you pass them: A guide to key retirement savings targets at every age and what to do after you hit them. (San Francisco Chronicle)

• AI Kingpins Adopt Crypto’s Playbook in Bid to Get Allies Elected to Congress: As voters grow concerned over AI’s impact, a new industry-backed super PAC is helping candidates who favor a lighter regulatory touch. Tech leaders are forming AI-focused super PACs, mirroring the crypto industry’s successful 2024 strategy to influence congressional races. (Bloomberg)

• The Plural Of Housing Anecdotal Is Not Data, But It Can Be A Leading Indicator: Pending sales are faster but less reliable; closed sales are slower but confirmed. “New signed contracts” give the most current market view. Anecdotal insight: Pre-qualified local feedback, like the Fed’s Beige Book, signals shifts before official data. Anecdotes from real estate professionals can signal market shifts before the data catches up — but must be verified. (Housing Notes)

• The Bezzle and the Bull Market: A sharp essay on John Kenneth Galbraith’s concept of “the bezzle” — the gap between perceived and actual wealth that expands in every bull market and only becomes visible in the bust. (Novel Investor) see also Fraud Investigation is Believing Your Lying Eyes: The mechanics of how fraud investigations actually work — pattern recognition, gut instinct, and following the paper trail until the numbers stop making sense. (Bits About Money)

• Colbert Says CBS Pulled Guest Amid FCC Scrutiny, Posts Interview on YouTube Instead. CBS lawyers blocked a Democratic candidate interview over FCC equal-time concerns, so Colbert took it to YouTube. Instead, Stephen Colbert’s sit-down with the Texas State Representative currently running for Senate was posted to the late-night program’s YouTube page—the URL for which Colbert was not allowed to share on-air. The Streisand Effect for the Win! (Late Nighter)

• America and China at the Edge of Ruin: A last chance to step back from the brink. Foreign Affairs on how the two largest economies are sleepwalking toward a confrontation that neither can afford and both seem unable to avoid. (Foreign Affairs)

• Democrats spy rare opening in rural America: President Donald Trump’s unpopular tariff and health care decisions have created an opportunity for the Democratic Party to court a GOP-loyal bloc. (Washington Post) see also Republicans see a big opportunity in crowded Democratic primaries: In more than a half dozen swing districts, House Democrats have nomination contests that could prove harmful. (Politico)

• A No-Name Director to Everyone but His 38 Million Fans: The debut film from one of YouTube’s most popular creators is a box-office hit, thanks to his subscribers. YouTuber Markiplier self-financed and directed “Iron Lung,” earning $13 million opening week entirely outside Hollywood. (The Atlantic)

Be sure to check out our Masters in Business last week with Heather & Doug Bonaparth, a married couple who work together and wrote a book on the financial challenges couples face: “Money Together: How to find fairness in your relationship and become an unstoppable financial team.” Our discussion sits somewhere in between financial planning and couples therapy, built around real stories that try to help couples find a healthier approach to money.

 

Happiness and life satisfaction in Europe consistently rank among the highest in the world

Source: @Isabel_Schnabel

 

Sign up for our reads-only mailing list here.

 

 

The post 10 Wednesday AM Reads appeared first on The Big Picture.