Kevin Duffy on wars in the Middle East

Wars are the embodiment of collective delusions.  The same laws that govern bubbles apply: the madness of crowds, intolerance for dissent, promotion of false and simple narratives and a rush of euphoria that brings about an orgy of poor decisions.  The good news is that all bubbles eventually burst, reversing a long, ruinous trend and exposing the false belief that supports them.  

In the Middle East there are multiple delusions taking place.  The first is that Israel has a history of acting in self-defense.  The second is that the U.S. has long been a “global force for good.”  The third is that Donald Trump is opposed to “forever wars” and a threat to the military industrial complex.

~ Kevin Duffy, "The End of the Innocence: American Foreign Policy in the Middle East," The Coffee Can Portfolio, August 27, 2025

 

Doug McMillon on the delayed impact of tariffs

We're keeping our prices as low as we can for as long as we can. As we replenish inventory at post-tariff price levels, we've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters. 

~ Doug McMillon, Walmart CEO, August 21, 2025

 

Sabrina Escobar on why the impact of tariffs has been muted so far

There’s another reason for the persistence of consumer strength: Shoppers haven’t yet felt the sting of higher prices.  That is largely because many retailers imported products ahead of spring and summer tariff implementations, allowing them to keep most of their prices unchanged, and have been willing to eat some of the higher costs. 

The reaction to earnings, however, suggests that doubts are seeping in.  Walmart stock dropped 4.5% on the day of its release, while BJ’sWholesale Club lost 6%, and Target, 6.3%, though the last had more to do with its choice of a new CEO than its business.  And those doubts largely stem from new tariffs as retailers restock inventories for the holiday season and companies are forced to pass on higher import costs to consumers to protect margins. “I don’t think you really start to feel the pinch of tariffs until the third quarter, so I think that’s the make-or-break quarter,” says Steven Shemesh, an analyst at RBC Capital Markets. 

Look no further than Walmart, whose stock has earned a premium valuation for its ability to attract shoppers with its low prices.  On Thursday, CEO Doug McMillon said the impact of tariffs has been “gradual enough that any behavioral adjustments by the customer have been somewhat muted.” But he warned that the company has seen costs increase each week as it replenishes its inventories at post-tariff price levels—a trend that McMillon expects to continue into the third and fourth quarters. And while Walmart plans to keep prices as low as possible, some increases are inevitable, especially after the company missed earnings expectations despite its superior revenue growth. 

~ Sabrina Escobar, "Walmart and Other Retailers Have Eaten the Cost of Tariffs. Now It Is the Consumer’s Turn.," Barron's, August 22, 2025

 

Jonathan Newman on Fed independence

Fed independence platitudes are like the robes worn by Supreme Court justices.  They provide the appearance of objectivity, sophistication, and sacredness.  Underneath, it’s all politics.

~ Jonathan Newman, "The Myth of Fed 'Independence'," The Misesian, July-August 2025

 

Rick Newman on socialism, Trump-style

Socialist Sen. Bernie Sanders applauded Trump’s plan to nationalize Intel and other chipmakers.  Sanders is the same guy who co-authored the Green New Deal, which would have entailed a government takeover of the transportation and energy sectors for many dubious reasons, including promoting “justice and equity” and “repairing historic oppression” of certain ethnic groups.  Trump’s motivation is obviously different, but at a certain point, socialist central planning and Trump’s attempted hostile takeover of capitalism start to look like the same thing.  Stock buyers beware. 

~ Rick Newman, "This week in Trumponomics: POTUS is on an investment spree," Yahoo!Finance, August 23, 2025

 

Shaun Rein: "China is going to become the AI leader of the world"

Going forward, China is going to become the AI leader of the world.  And part of the reason is because they're doing open source, which is something that Global South (or the Global Majority) likes because it's going to lower their own costs in adopting AI.  And then second, the reason why DeepSeek and other Chinese artificial intelligence companies are going to win is because they are able to do the same as American firms can do at a fraction of the cost.  So when you have a combination of cheap and open source, that means it's going to be adopted throughout the entire world.

 ~ Shaun Rein, Twitter/X post, August 18, 2025

 

Harris Kupperman on his investment edges

I know that many investors like to talk about their competitive advantages, but I’ve come to realize that I really don’t have any great advantages on the research side.  So much of my process is simply trusting my gut.  If I’m curious about something, it has a funny way of working, and when I become bored with something, it has a funny way of falling apart.  I frequently have visceral views of things, and an uncanny inability to sleep when some position needs to be disposed of.

Competing investors, focused on harvesting real-time data for almost imperceptible competitive advantages have unlimited resources at their disposal, and we are always going to lose the informational arms race against them.  Where we can win is through investing discipline, knowledge of prior cycles, and most importantly, by harvesting the foibles of others who fixate on the immediate, while ignoring that investing is a process—what happens a year or two from today, should get discounted today, yet rarely does, as investors increasingly truncate their timeframe.

~ Harris Kupperman, Praetorian Capital 2025 Q2 Investor Letter, August 7, 2025