TheChek News Flow

Hedge fund manager will be responsible for implementing president-elect’s pledges to cut taxes and raise tariffs

Donald Trump has picked Scott Bessent to be his US Treasury secretary, nominating one of his biggest financial backers as the top economic official of his second administration.

Bessent will be responsible for overseeing the president-elect’s most prominent economic pledges, including sweeping tax cuts, while maintaining the stability of the world’s largest economy, its most important bond market as well as the dollar.

The hedge fund manager’s economic philosophy seeks to bridge traditional free-market conservatism with Trump’s populism. He has defended the president-elect’s repeated threat of raising tariffs against accusations that they would upend relations with US allies and raise consumer prices, saying they are a trade negotiating tool and a way to raise government revenue.

In a statement on Friday, Trump described Bessent as “one of the world’s foremost international investors and geopolitical and economic strategists”, who was “widely respected”.

“He will help me usher in a new golden age for the United States, as we fortify our position as the world’s leading economy, centre of innovation and entrepreneurialism, destination for capital, while always, and without question, maintaining the US dollar as the reserve currency of the world.”

Trump added that with Bessent at the helm, his administration “will reinvigorate the private sector, and help curb the unsustainable path of federal debt”.

Bessent will also be responsible for steering the administration’s sanctions policy, including on Russia over its full-scale invasion of Ukraine, as well as the rules that govern Wall Street. His appointment will need to be confirmed by the US Senate, which will be controlled 53-47 by Republicans next year.

Trump on Friday evening also selected Russell Vought to once again lead the Office of Management and Budget. “Russ knows exactly how to dismantle the Deep State and end Weaponized Government, and he will help us return Self Governance to the People,” Trump wrote. The president-elect also picked Lori Chavez-DeRemer, a Republican Congresswoman from Oregon, to be his labour secretary.

Wall Street bankers across the political spectrum were digesting the news of Bessent’s appointment. They pointed out that a lot would depend on how much independence he would have to manage the economy. 

A dealmaker at a large bank said Bessent had a strong pedigree managing complex financial situations but was concerned that he would be a “puppet” of Trump.

“Bessent is a very skilled investor, he has a great track record over decades but I fear he won’t have much autonomy,” the dealmaker said.

The 62-year-old Bessent is a Wall Street veteran who has been among Trump’s most vocal advocates and closest economic advisers in recent months.

It will be his first government position. He currently runs the hedge fund Key Square Capital Management. Bessent previously worked closely with billionaires George Soros and Stanley Druckenmiller.

Trump also went with a Treasury secretary who had Wall Street experience during his first term, when former Goldman Sachs banker Steven Mnuchin held the post.

“There’s nobody with a better understanding of markets [than Bessent] to manage $36tn in debt, who’s a vocal advocate of the president-elect’s economic agenda, and has the stature around the world to navigate the global economic challenges we need to confront,” said Michael Faulkender, a finance professor at the University of Maryland’s Smith School of Business and chief economist at the Trump-aligned America First Policy Institute.

A top corporate lawyer and longtime Democratic donor said that Trump’s decision was encouraging. “[It is a] sensible choice that will reassure the financial community. The Treasury functioned well under Mnuchin and I would expect Bessent to provide similar stability,” the lawyer said.

Apollo Global Management chief executive Marc Rowan and former Federal Reserve governor Kevin Warsh were candidates for the Treasury role, travelling to Mar-a-Lago this week for interviews with Trump. So was Howard Lutnick, Cantor Fitzgerald’s chief executive, who is also co-chair of the Trump transition team. John Paulson, another billionaire hedge fund manager, had also been in the running before dropping out.

In a statement on Friday, Paulson called Bessent an “outstanding pick”.

“He has the market experience and financial acumen to successfully implement President Trump’s economic agenda.”

The nomination of Bessent, who is seen as a pragmatic pick, follows a number of controversial appointments, including Fox News host Pete Hegseth for defence and vaccine-sceptic Robert F Kennedy Jr as health secretary. The president-elect had also nominated former Florida congressman Matt Gaetz to run the justice department, but he withdrew his name from consideration for the role.

Bessent, a Yale University graduate who grew up in South Carolina, will take the helm of a US economy that is on solid footing. After the worst cost of living crisis in decades, inflation has steadily declined following a period of high interest rates. Unemployment remains historically low at 4.1 per cent, keeping consumer spending strong.

Many economists have warned that Trump’s protectionist economic plans, and his pledge to deport millions of immigrants and slash taxes, could reignite inflation and dent growth — criticism that Bessent has strongly rejected.

In an interview with the Financial Times in October, Bessent framed tariffs as a “maximalist” threat that could be pared back during talks with trading partners. He also denied that the Trump administration would devalue the dollar.

“My general view is that at the end of the day, he’s a free trader,” Bessent told the FT, referring to Trump. “It’s escalate to de-escalate.”

But Bessent has floated more unorthodox ideas, including taking steps that would infringe on the long-standing independence of the Fed.

Speaking to rightwing ideologue and Trump ally Steve Bannon recently, he also floated cutting government spending by $1tn over the next decade.

Trump’s transition team also announced a series of health nominees: Johns Hopkins surgeon Marty Makary, who rose to prominence for opposing vaccine mandates during the pandemic, was named as its choice as head of the Food and Drug Administration. Fox News contributor Janette Nesheiwat was nominated as surgeon general and doctor and former GOP congressman Dave Weldon was picked to be head of the Centers for Disease Control and Prevention.

Stocks of anti-obesity drugmakers Eli Lilly, Novo Nordisk, and Amgen have gotten hit as the market frets over what a Robert F. Kennedy Jr.-run Department of Health and Human Services would mean for the group. The worries are overblown, and investors should use the selloff to scoop the stocks up on the cheap.

It’s been a difficult second half of the year for Amgen, Lilly, and Novo Nordisk, which have tumbled since peaking during the summer. The selling started as run-of-the-mill profit-taking, as investors locked in gains from these names. It picked up steam after the Federal Reserve cut interest rates and the election approached. When President-elect Donald Trump appointed RFK Jr. to lead the agency, panic selling set in—and no wonder.

Kennedy isn’t a fan of Novo Nordisk’s weight-loss treatment Ozempic, which costs the government too much money to insure. Investors are concerned that he may push for less insurance coverage of the drugs or even lower GLP-1 prices. Amgen stock has dropped 9% in November, while Lilly has fallen 17% and Novo Nordisk has declined 10%.

Don’t expect much to come of the fears. For starters, the agency, for all its responsibilities, doesn’t have unilateral power to change the landscape of drug coverage and pricing. It would take an act of Congress to allow Medicare to pay for anti-obesity drugs.

BMO Capital Markets analyst Evan Seigerman reiterated his Outperform ratings on Lilly, Amgen, and Novo Nordisk on Monday. “Continued selloffs of obesity names within our coverage…reflect more fear than real fundamental downside risk,” he wrote.

There’s still plenty of room for growth in the obesity space. A little over a billion people now suffer from the condition globally, according to the World Health Organization, and with the treatments selling for hundreds and sometimes thousands of dollars, the long-term sales opportunity could be huge. Patients are only starting to adopt the treatments, which means drugmakers could experience a massive boost to profits in the years to come.

That should mean supercharged growth for Lilly. Sales of Zepbound and Mounjaro are expected to hit about $18 billion by 2026, according to FactSet’s analyst consensus forecast, up from projections of just over $8 billion for this year. Its total revenue is expected to hit $69 billion in 2026, up from $45.7 billion in 2024, while earnings surge to almost $30 a share, from $13.26. What’s more, at $753, Lilly stock fetches 35 times 12-month forward earnings, down from a July peak of 57.2 times—a far less demanding valuation for a stock that is still producing double-digit growth.

Novo is in a similar situation. Sales of Ozempic and Wegovy are expected to rise from $26 billion this year to about $41 billion by 2026. While its other medications are growing at a slower pace, the obesity drugs should still drive double-digit cumulative revenue and earnings growth over the next two years. The Swedish company’s American depositary receipts trade at a more compelling 26 times 12-month forward earnings, down from a July peak of 38.9 times.

Amgen stock never enjoyed the same boost as Lilly and Novo, partially because its obesity drug has yet to hit the market. The company, however, said on its third-quarter earnings call that an obesity candidate, currently known as AMG 513, has begun Phase One testing. Eventual approval of the product could result in billions of dollars of additional sales, boosting earnings. Amgen needs any boost it can get. Its sales are expected to grow to $34.9 billion by 2026, up just 11% from 2024’s $31.1 billion, as some of its popular drugs go off patent and it loses market share. But at just 13.8 times 12-month forward earnings, down from its July peak of 16.7 times, those worries—and RFK Jr.—seem priced in.

Never let a healthy selloff go to waste.

Is there anything Elon Musk can’t do? After defying skeptics who said he couldn’t sell two million Teslas, or launch and retrieve rockets from space, slashing $2 trillion a year from the federal budget should be easy-peasy, according to his legions of fans.

Musk and Vivek Ramaswamy, who have been tasked with heading DOGE, the newly hatched Department of Government Efficiency, are aiming to cut a cool $2 trillion in federal spending. Trouble is, of the $6.1 trillion in annual federal outlays, only $1.7 trillion is discretionary. And the bigger problem is that non-discretionary spending, especially interest on the debt, is soaring, and there is nothing this dynamic duo can do about that.

“The reality is that the cuts [they] can make will be far less substantial than those required to make any meaningful dent in our runaway finances,” writes Stephanie Pomboy, the mistress of MacroMavens. “As for Elon’s hatchet to bureaucracy, total government wages and salaries are a little over $800 billion annually.”

That isn’t enough to matter, at least to the bond market, as has been highlighted ad nauseam in this space for the past year and a half. All those notes and bonds issued at never-before-seen and never-to-be-repeated interest coupons of 1% and less that are coming due will be replaced by debt with more normal yields in the 4% range. And so Uncle Sam’s interest tab has climbed from $628 billion in 2023 to just under $900 billion in 2024, and currently is running at $1.2 trillion annually, Pomboy says.

“Barring cuts to entitlements (which no one is talking about), rates are going to be higher for longer despite the efforts of Elon...and [Federal Reserve Chair] Jay Powell,” she concludes.

Far from the $2 trillion expense-cut fantasy, the incoming Trump administration’s top economic priority is to extend the Tax Cut and Jobs Act, the signature measure of his first term, which expires at the end of 2025. That will cost $4 trillion over the next decade, 2½ times as much as the original $1.6 trillion, according to the Peter G. Peterson Foundation.

That doesn’t mean there are no cuts to be made. The Committee for a Responsible Federal Budget listed this past week “$700 Billion of Easy Deficit Reduction” for the next decade. Among the savings, some $50 billion would come from closing the electric-vehicle credit-leasing loophole, which gets around restrictions on the $7,500 federal tax credit for EV purchases, depending on their origin and the buyer’s income.

Musk also has voiced his opposition to the EV tax credit, stating it mainly helps competitors of Tesla, where he’s CEO, such as General Motors and Ford Motor. And he is apt to champion the use of artificial intelligence to boost government efficiency. Macquarie strategists Thierry Wizman and Gareth Berry cite one estimate that automating routine administrative tasks could boost U.S. government productivity by $519 billion annually, for $5.2 trillion in savings over 10 years.

AI also could reduce the deficit by detecting tax evasion and improving the selection of tax returns for audit, they add. Improved compliance could boost revenue by $4.8 trillion over 10 years without boosting tax rates, they note.

Wizman and Berry further point to “static” analysis that estimates that tariffs favored by President-elect Trump of 10% to 20% could bring in between $2 trillion to $3.3 trillion over 10 years. But tariffs are a risky way to raise government revenue, they add, given the possibility of retaliation by trade partners. They note a Tax Foundation analysis that negative economic impacts could actually result in lower overall fiscal revenues.

None of these measures comes close to the $2 trillion annual savings that Musk and Ramaswamy seek. Meanwhile, if Trump’s promise to extend the TCJA, plus enact campaign pledges to exempt Social Security and tips from taxes, boost the cap on state and local tax deductions, and reduce the corporate tax rate to 15% from 21% for manufacturing firms all come to pass, the already huge federal deficit at 6.5% of gross domestic product would widen further, writes Olivier Blanchard, former chief economist at the International Monetary Fund, for the Peterson Institute for International Economics.

“If Trump enacted all the measures he has suggested, a question would be how many years it will take for investors to question the risk-free status of U.S. Treasuries,” he writes. “Leaving aside this risk issue, what is likely, however, is that a further fiscal expansion, starting from an economy close to full employment, will lead to inflation and, by implication, higher Fed policy rates and a strong dollar. Once again, this scenario will trigger a potential conflict with the Fed.”

If the Fed sticks to its mandate, Blanchard says, it will stand in the way of some of Trump’s policy goals and have to increase rates to limit economic overheating, leading to dollar appreciation. As I wrote a week ago, the risk is that the U.S. central bank instead underwrites higher inflation so the economy expands briskly enough to keep pace with the debt. That’s what the recent rise in bond yields suggests.

The company is facing pressure on two fronts—the government and a host of new AI-powered search rivals. It has the capacity to meet both challenges and continue to prosper.

Google is under attack. Alphabet stock will still emerge a winner.

Alphabet shareholders have every right to be worried. This past week, the U.S. government hit Google— and hit it hard —when it put forward remedies to break Google’s hold on search, which included selling its Chrome browser and monitoring data, causing the stock to fall 4.7%, to $167.63, on Thursday. The action comes as investors were already fretting about the rise of generative artificial intelligence —computers capable of answering complex questions in, mostly, plain language—which have created an opening for competitors like ChatGPT, Perplexity, and Microsoft in a way that Yahoo! and DuckDuckGo never could. Not only can they siphon users away from Google, but the search for answers instead of links also could be devastating for its advertising business. Without search and the ad dollars it produces, the mighty Alphabet collapses—and so does its stock.

Alphabet, however, is more than up to the task of defending itself. Since going public in 2004 —at a split-adjusted $2.13 a share—Google has navigated the shifting terrain of the internet, including the transition from desktops to mobile phones, with relative ease. While the future will be more complicated, generative AI has the potential to add revenue, as Gemini, Google’s AI tool, ramps up and becomes more powerful. While the government’s attempt to break Alphabet apart could be an overhang, it appears to be reflected in the stock, which is the cheapest of the Magnificent Seven and even cheaper than the S&P 500 index. Even as that future unfolds, the company’s search business remains dominant—and cash-generating—and that is unlikely to change, even as the way people find information does.

“I don’t see betting against Google,” says Jason Browne, president of Texas-based investment advisory firm Alexis Investment Partners.

For two decades now, Alphabet has been a winner. Its advertising business generates more than $250 billion annually, while Android has become the world’s most popular mobile operating system, easily surpassing Apple’s iPhone in users. Following the lead of Amazon.com and Microsoft, Alphabet moved into the cloud, which is expected to generate $58 billion in revenue for the company next year. At the same time, though less talked about than TikTok, YouTube has become the planet’s No. 1 content delivery platform, with viewers watching more than a billion hours daily.

The rivers of cash generated from all of its units—some $435 billion over the past decade—have allowed Google to indulge in what it calls its “other bets,” including Waymo’s self-driving car initiatives and Google Fiber broadband internet, money-losing businesses that investors simply ignore. And it’s all tied together by Google’s search engine, creating an aura of invincibility and inevitability.

Then, ChatGPT launched in November 2022. Generative AI, with the ability to scrub the net and provide easy, if sometimes dubious, answers, opens up a new possibility for accessing data—and a new threat to Alphabet’s dominance. Users no longer have to type questions into Google’s search bar and scroll through links. Now they can type in a question and get an answer. ChatGPT was mind-blowing when it arrived—and an immediate success. “It was the fastest [growing], most exciting app that has ever hit the market,” says Futurum Group CEO and technology researcher Daniel Newman, who noted that it reached 100 million active users just two months after its launch.

Perplexity, launched a month after ChatGPT, has grown to 15 million monthly active users and recently launched a shopping assistant, allowing users to type in a question, get an answer, and execute a transaction. Dmitry Shevelenko, Perplexity’s chief business officer, calls the company’s tool an “answer machine,” one that gives users the information they need versus just giving them links. Perplexity answered about 425 million questions over the past 30 days, up from 500 million in all of 2023. Ultimately, the company hopes to create an all-in-one app, where users can act on what they have learned and never have to leave.

These changes seem ominous for Google. Follow them to their logical conclusion and it isn’t hard to imagine traditional search fading away and the market fragmenting, with consumers one day communicating with their devices via an AI-generated custom interface. In February, technology research firm Gartner projected that total search engine volume would drop 25% by 2026. There’s only one problem with those dire predictions—the data don’t back them up. Microsoft was the first mover, putting ChatGPT into Bing, while boldly claiming that taking 1% of search market share would translate to $2 billion in incremental revenue. “Microsoft took no share,” says Futurum’s Newman.

What’s more, Alphabet’s October earnings report showed no signs of a search slowdown. It easily topped earnings and sales forecasts, while revenue from its cloud business gained 35%. But it was search that was perhaps the most surprising. Anyone who visited Google recently noticed that the service often provides an AI-generated summary of the findings, as well as a list of links. Investors had worried that would mean fewer links and ads, but management appeared optimistic about its ability to make money from those searches.

“We still have no idea how they’ll really monetize AI or other innovations, but the perceived ‘threats’ (OpenAI, Meta AI, Perplexity, and upcoming Meta and OpenAI search) will have to wait, as Google Search growth of 12% beat estimates modestly,” writes Melius analyst Ben Reitzes.

Alphabet has something going for it that OpenAI, which has a partnership with News Corp, the owner of Barron’s parent Dow Jones, and Perplexity don’t—it’s a moneymaking business. The two start-ups are still in the early stages of their business development and aren’t profitable. How they ultimately monetize their businesses—and whether they can successfully do it—remains to be seen. Perplexity is also being sued for not paying for the content it feeds into its large-language models, or LLMs, something that could ultimately force it to change how it operates. (Dow Jones is one of the companies suing Perplexity.)

While the upstarts try to figure things out, search should keep growing. Media investment and data-services provider GroupM projects that search advertising revenue will grow more than 6% in 2025, up from about 5% in 2024, with about 5% average annual growth through the decade’s end. It isn’t that people like to click through a list of links produced from a query, but that AI-assisted search will produce better results, leading to more questions and further searches. Rather than being a paradigm shift like the switch from desktop to mobile, AI search may be a new format for answers, says New Street Research analyst Dan Salmon. “[It’s] more akin to the integration of images, maps, and other forms of content beyond the original text links,” he explains. Salmon rates Alphabet stock a Buy with a $213 price target.

The advent of AI is also likely to create new types of search and novel ways to earn money from sifting through information. There is the traditional ad-supported version—now with AI summaries—that Google dominates, and premium tools are available by subscription. There are even tools being created for individual companies, such as GE Aerospace’s ChatGPT-powered Wingmate, which uses LLMs to provide relevant answers to the questions from the company’s engineers based on design and operating manuals. Now, imagine every company in the S&P 500 doing the same thing. “Search behavior already moved to a dual revenue stream: subscriptions and ads,” Salmon says.

Alphabet is playing in both pools. Google One has over 100 million subscribers, and its premium version includes Alphabet’s highest-level AI functionality for $20 a month. ChatGPT’s premium product has about 10 million subscribers, Salmon estimates. Alphabet also has the advantage of experience, including years of work with its Google Brain and DeepMind AI projects and its internally developed Tensor AI hardware. And it recently purchased character.ai for $2.7 billion to help with these efforts. It has the advantage of $154 billion in operating cash it is expected to earn in 2025 as it gets ready to spend $59 billion on its AI future, similar to what Microsoft spends a year.

That spending should pay off. Salmon estimates that generative AI overviews and subscriptions keep Alphabet’s Google business growing at about 10% a year on average through 2027. “New AI features in search are resulting in better engagement and higher levels of user satisfaction,” says Wedbush Securities analyst Dan Ives, adding that structural risks to Google’s search dominance are overblown. Wedbush rates Alphabet shares a Buy and has a $210 price target.

AI might not be able to slow Google down, but the antitrust risk is real, as this past week’s decline demonstrates. In August, U.S. District Judge Amit Mehta ruled in favor of the Department of Justice, saying that Google illegally monopolized search. This past week, the DOJ proposed a list of remedies that include selling the Chrome browser, prohibiting the ownership and control of anything that creates a preference for Google, and “restoring competition through syndication and data access”—essentially requiring the company to provide its core search index to anyone who wants it to label as their own free of cost.

“We view many of the DOJ’s recommendations to restrict Google Search (and other products) as unlikely to be approved by the court, or to survive an appeals process,” writes Baird analyst Colin Sebastian, who rates the stock a Buy with a $205 price target. “Beyond the reasonable ask to prohibit search distribution agreements, the DOJ remedies are, in our view, a wish-list of restrictions on Google that stray well beyond the court’s ruling.”

Alphabet is fighting the ruling, but other cases loom, including one the U.S. has brought against the company over its advertising business. Appeals are likely to delay any action until 2027 at the earliest. In October, President-elect Donald Trump came out against a Google breakup in favor of making it more fair.

Some changes will be offset. An end to Alphabet paying companies like Apple to make Google the default search engine could mean a loss of market share. But the company spends billions annually on search acquisition costs, including some $20 billion to Apple in 2022, according to court filings. The impact of lower revenue and expenses could, in theory, result in a near-negligible hit to earnings per share, according to Wolfe Research analyst Shweta Khajuria.

Alphabet stock appears to reflect these antitrust concerns. It trades for 19.4 times earnings, below the S&P 500’s 22 times and Meta Platforms’ 22.9 times. “The stock is already reflecting that risk,” says Putnam Investments’ Ellen Hazen, who comments that her firm would consider adding to its existing position if it falls back to about $170.

Oakmarket Select portfolio manager Bill Nygren goes even further. He argues that Alphabet, with a market value of $2.1 trillion including cash and debt, is worth more than the sum of its parts. “Forcing investors to recognize the value of each [business] would probably make the stock go up,” he says.

An analysis of those individual parts bears that out. Alphabet’s cloud business, which could generate roughly $20 billion in 2025 earnings before interest, taxes, depreciation, and amortization, or Ebitda, would be worth $325 billion at a 16 times multiple, similar to what Amazon and Microsoft fetch. YouTube would be worth up to $800 billion if it traded at 22 times Ebitda, the average of what Meta and Netflix change hands for.

Waymo is a little harder to value. Uber Technologies is valued at $150 billion, while Wall Street valuations for Tesla’s self-driving business range from $100 billion to trillions, even though the company has yet to complete a single fully autonomous ride. Alphabet’s Waymo completes 150,000 self-driving cab rides each week, making it a real self-driving player. It is reasonable to value it at about $300 billion, though some bulls think it’s worth far more than that: Deepwater Asset Management’s Gene Munster put Waymo’s valuation at $350 billion to $850 billion by 2030 and expects a spinoff in the next two to four years.

That leaves Alphabet’s search business worth roughly $550 billion, adjusted for its $117 billion in net cash and investments, or about five times Ebitda. Nygren, who doesn’t include Waymo, calculates that Google Search trades at about 11 times earnings. That is enough of a margin of safety for him, given what Alphabet is facing.

As for upside, it’s easy to justify a $260 stock price for the company based on the sum of its parts, up 55% from Thursday’s close. Or Alphabet could be recognized as one of the world’s dominant tech companies. Getting back to its historical premium relative to the market implies that Alphabet shares would trade for about 26 times earnings and be worth about $234 a share, up 40%. “We think of it as a high-multiple tech stock that isn’t [priced] like one,” says Nygren.

For Alphabet, AI isn’t the end of the line—it’s the next step to a brighter future.

Musk Unleashes Online Army on Federal Workers. ‘A Tough Way to Find Out She’s Losing Her Job.’

As Trump efficiency czar, the billionaire is targeting employees by name on X—sparking pushback

As co-director of President-elect Donald Trump’s nascent Department of Government Efficiency, Elon Musk has wasted no time posting to his 205 million followers about specific government departments he views as bloated.

But this week, Musk has escalated from targeting government agencies to singling out individuals—sparking his online army of followers to launch blistering critiques of ordinary federal employees.

One recent post by the billionaire zeroed in on Ashley Thomas, a little-known director of climate diversification at the U.S. International Development Finance Corp., after another user on Musk’s social-media platform X questioned her role.

Musk’s repost—“So many fake jobs”—garnered 32 million views, triggering an avalanche of memes and ridicule from his followers against the employee, such as, “Sorry Ashley Thomas Gravy Train is Over.”

Earlier this month, in a move heralded by many of his supporters, Trump tapped Musk and biotech-company founder Vivek Ramaswamy to spearhead DOGE—sharing its name with a Musk-promoted cryptocurrency—to slash spending, regulations, and restructure federal agencies.

In a Wall Street Journal op-ed Wednesday, the two men envisioned “mass head-count reductions” across the federal bureaucracy. On Wednesday, Musk shared on X a past TV interview with Milton Friedman in which the economist recommended the elimination of a number of federal agencies, including the departments of education, commerce, agriculture and housing and urban development. “Milton Friedman was the best,” Musk said in apparent agreement.

Ramaswamy in interviews has offered an unusually blunt—and likely impossible to implement—strategy for how to slash the federal workforce: firing those whose Social Security numbers start or end with odd numbers. “Boom. That’s a 75 percent reduction done,” he said on a podcast interview this fall.

Both leaders have since called out numerous instances of alleged government waste on X, soliciting public recommendations for budget cuts.

This week, Musk resumed his controversial practice of calling out individuals—a tactic going back to X’s previous incarnation as Twitter.

In 2021, Musk took aim Mary “Missy” Cummings, a Duke University engineering professor who was appointed to the National Highway Traffic Safety Administration as a top adviser, and had been critical of Tesla’s advanced driver-assistance system.

After taking over Twitter in 2022, Musk targeted Yoel Roth, the platform’s former head of trust and safety, who had recently left. Musk tweeted, incorrectly, that it looked like Roth had argued “in favor of children being able to access adult Internet services.” Some of the platform’s users interpreted it as Musk calling Roth a pedophile, and they posted calls for Roth’s death. Roth moved out of his house temporarily because of threats, the Journal reported at the time.

Musk’s targets this week included Alexis Pelosi, California Rep. Nancy Pelosi’s relative and a senior climate adviser at the Department of Housing and Urban Development.

But that post also included the names of two obscure federal officials with climate-related jobs—including one who had actually left her job at the Energy Department in August.

“These tactics are aimed at sowing terror and fear at federal employees,” said Everett Kelley, president of the American Federation of Government Employees, which represents more than 800,000 of the 2.3 million civilian federal employees. “It’s intended to make them fearful that they will become afraid to speak up.”

Kelley said Musk is going after the wrong target if he focuses only on federal employees. Kelley said far more is spent by federal contractors such as himself — $750 billion annually compared with about $200 billion for the civilian workforce, one third of which are veterans as he is.

“We are a comparative steal, and we want to help clean it up too,” said Kelley, a former Army sergeant. “The people I represent have been called names like deep state, but they are working people just like you and I.”

The 37-year-old Thomas, the target of Musk’s viral repost, works for a federal agency that partners with private companies to finance ways to improve living standards in developing countries.

With engineering, business and water science degrees from the Massachusetts Institute of Technology and University of Oxford, Thomas spent years doing field work in Africa and writing research papers such as one on a technology that can help extract water from air in arid countries, according to her past tweets.

She eventually went to work as the agency’s director of climate diversification in 2023, when federal personnel records show she earned $172,075 a year.

An agency official said the climate diversification portfolio is highly technical and is focused on identifying innovations that serve U.S. strategic interests, including bolstering agriculture and infrastructure against extreme weather events.

Thomas previously had served stints in various small companies and nonprofits, some of which do work in the developing world, according to her online resume.

How does a routine federal employee come to the attention of Musk, the world’s richest man?

The controversy erupted when “datahazard,” an X user whose anti-Biden posts have drawn Musk’s attention, questioned Thomas’s job on Tuesday to nearly 170,000 followers.

Musk’s repost sparked a barrage of taunts, with his followers making jeers such as, “A tough way for Ashley Thomas to find out she’s losing her job.”

Michael Skolnik, a longtime civil rights activist, was among those who fired back at the post. “You have absolutely no idea what you are talking about and dangerously targeting a person who works an honest job to provide for their family.”

A representative of the “datahazard” X account, who didn’t give a name, said it was legitimate to give names of employees like Thomas because she is on a list of senior officials who are public figures. “Taxpayers have a fundamental right to know who runs our government,” this person said via a direct message on X.

LinkedIn and Facebook pages for Thomas, who lives in the Seattle area, were no longer live as of Wednesday.

Tax rises drive surge in venture capital trust investment

Savers have put £250mn in VCTs since April, up 27% in a year

Retail investors are ploughing money into small British companies as they seek out tax-efficient products in the wake of Labour’s general election win and the biggest tax rise in the postwar era.

Savers sank £250.1mn into venture capital trusts (VCTs) from the start of the tax year to mid-November — a 26.6 per cent increase on the previous year according to figures from Wealth Club, an investment service.

In last month’s Budget, chancellor Rachel Reeves raised the tax burden to its highest level since the 1950s, announced that pensions would no longer be exempt from inheritance tax and raised capital gains tax.

“Generally, as tax rules get tighter on pensions, the money has to find a home somewhere else and often it goes into VCTs,” said Alex Davies, chief executive of Wealth Club.

The VCT scheme, extended this year until 2035, allows individuals to invest in early-stage businesses via actively managed VCT funds.

Investors are rewarded with income tax relief of up to 30 per cent on up to £200,000 a year — provided they purchase shares at issue and hold them for at least five years. Dividends and capital gains are tax-free.

VCTs have previously backed household names such as the property platform Zoopla and the UK arm of the Five Guys burger chain.

On Friday, investment platform Hargreaves Lansdown launched a new online VCT investment service, citing the government’s extension of the scheme and tax changes announced at the Budget, which included raising capital gains tax from 20 per cent to 24 per cent for higher earners.

Hargreaves’ service will debut with a group of five VCTs managed by Calculus Capital, Octopus Investments and Blackfinch Ventures. Clients will pay a £50 dealing charge to apply for the VCT service and a subsequent £50 fee to trade. Hargreaves will not take commissions or charge platform fees.

Emma Wall, head of platform investments, said the government had provided “assurances” it would retain the structure and tax efficiency of VCTs.

Venture capital trusts offer the prospect of higher returns than other assets, but come with greater risk and low liquidity.

Paul Stewart, financial planner at Finura, said savers should use up their Isa and pension allowances before considering riskier VCTs.

“The big advantage [of VCTs] is the upfront 30 per cent tax relief,” he said. “Where it becomes important is for higher earners who because of the pensions taper have their annual allowance reduced. By the time you’re earning £360,000, your allowance is reduced to £10,000.”

Investors must be willing to “tie up capital for five years” to benefit from tax breaks, noted Katherine Waller, co-founder of wealth manager Six Degrees, which advises wealthy individuals and entrepreneurs.

“By investing in a VCT, you’re effectively investing in a portfolio,” added Richard Stone, chief executive of the Association of Investment Companies. “You’re spreading that risk across a range of businesses and you hope that the handful of winners beats the handful of losses. But by the nature of it being high risk, some of those businesses fail.”

Waller tells her clients that VCTs “shouldn’t ever form more than 10 per cent of the value of their estate because of the illiquidity and the level of risk”.

Inflows to VCTs hit an all-time high in 2021, surpassing £1bn for two consecutive years before falling to £882mn in 2023.

“From 2010 onwards, we saw a huge uptick in the VCT market,” said Davies. “And then [in the 2023/24 tax year] the rules on pension allowances were tweaked slightly, so that higher earners could put more into their pensions than previously. As a result there was less money in VCTs.”

The drop in VCT funding followed a wider slowdown in private markets that was driven by an economic downturn and high interest rates.

“It feels like we’re turning a corner now,” said Davies.

There were 50 VCTs totalling £6.3bn in assets under management as of the end of October, according to the AIC.

Forty-three of these invested largely in unquoted companies and managed £5.6bn. The remainder invested in companies quoted on Aim, London’s junior stock exchange for small-cap stocks.

Designer Thom Browne did not infringe Adidas trademarks, court rules

High Court judge says consumers can distinguish between three and four stripes

Luxury brand Thom Browne did not infringe Adidas’s trademarks by printing four stripes on its clothing, a judge at the High Court in London has ruled.

The German sportswear group faced off against the New York design brand earlier this year in the latest round of a long-running global legal dispute over intellectual property.

Thom Browne, known for tight-fitting grey men’s suits that are sometimes accompanied with shorts, and whose garments feature a four-stripe design, sued Adidas in an effort to invalidate its trademarks.

Adidas, which is famous for its three-stripe logo, countersued claiming that the US designer had violated its intellectual property.

In a ruling made public on Friday, Mrs Justice Joanna Smith said a consumer “paying a moderate degree of attention will generally perceive the difference between three stripes and four”.

She said: “If he or she were to be given six seconds . . . then I have no doubt that he or she would have no difficulty whatever in perceiving that difference.”

The court found a handful of Adidas trademarks covering items including tracksuit bottoms and a bag were invalid.

She also found that irrespective of whether the trademarks were valid or not, Thom Browne had not infringed them.

Brand founder Thom Browne, 59, had sported his signature suit — with shorts — when he attended the legal proceedings in July. A clothing rack had been set up with about 20 garments for the judge to examine.

Adidas has also taken legal action to protect its intellectual property in other jurisdictions. It launched proceedings against Thom Browne in 2021 in the US and a New York jury found in favour of Thom Browne last year.

In a statement following the release of the ruling on Friday, the eponymous designer — who is regarded as one of the most influential designers of the past two decades — said “David has prevailed over Goliath”.

Browne, whose garments have been sported by stars including basketball player LeBron James, added: “I see this as a triumph for designers around the world.”

Adidas said it would “carefully review the findings and determine our next steps”. It said it was pleased the court “upheld key aspects of our trademark protection, specifically ruling that the 3-Stripes mark has a strong reputation and is distinctive of Adidas products”.

It added: “Despite certain elements of the decision, Adidas continues to maintain strong trademark protection for our 3-Stripes mark in the UK and globally.”

Thom Browne, which was launched in 2001 in a small shop in Manhattan’s West Village, originally adopted a three-bar motif on its garments but said it had agreed to add a fourth bar after Adidas made a complaint in 2007.

The company is now a part of the Italian family-controlled Ermenegildo Zegna group.

Unilever will slim down but not spin off food business, says chief

Hein Schumacher to press ahead with IPO of ice-cream unit as part of turnaround plan for FTSE 100 consumer group

Unilever will slim down but not spin off its food division, its chief executive has said, as the London-listed consumer goods group presses ahead with the listing of its ice-cream unit.

Hein Schumacher, who has launched a turnaround plan for the FTSE 100 group, has identified several food brands to “prune”, amounting to about £1bn in sales revenue, he told the Financial Times. Unilever’s food business generated €13.2bn turnover in 2023, of which the largest brands, Knorr and Hellmann’s, accounted for 60 per cent.

“I believe in fewer, bigger, better . . . and that is what we choose to execute on,” he said in an interview ahead of the company’s capital markets day on Friday. 

Since taking over as CEO last year, Schumacher has pushed through a rapid and wide-ranging restructure, including the separation of Unilever’s ice-cream division, a cost-cutting drive and hefty job losses. 

His comments come as the mayonnaise-to-soap consumer group shelved plans to find a private equity buyer for its ice-cream business — which includes Ben & Jerry’s, with which it is entangled in a legal spat over Unilever’s alleged silencing of the brand’s support for Palestinian refugees.

Schumacher’s pledge not to demerge the food business — whose other brands include Colman’s, Pot Noodle and Marmite — brings clarity to Unilever. A separation and sale of the division was previously explored as a way to fund the acquisition of GSK’s consumer health business but the pharmaceutical group rejected Unilever’s £50bn bid in 2022.

The Dutch chief executive, who joined Unilever from dairy co-operative Royal FrieslandCampina, said he was in the process of deciding where to list the ice-cream business and said he would announce details in the first half of next year. Schumacher added that he had “left the door open” to offers.

“We’re talking to governments, to authorities, but also to stock exchanges, the banks, etc” Schumacher said of the planned initial public offering. “We’re gathering all the facts to make the right call for that business.”

Unilever unveiled a new set of strategic priorities on Friday, including focusing investment in its best-performing emerging markets such as India, Indonesia and Brazil, accelerating growth of its premium brands in the US and taking its high-margin beauty and wellbeing businesses international.  

The company also reiterated its medium-term target for mid-single-digit sales growth and volume growth of 2 per cent. The company expects to achieve €800mn in cost savings by the end of next year.

After more than half a decade of lacklustre performance at the company, Schumacher has implemented a “growth action plan” — known internally as “the gap” — which has been well received by investors. The company’s share price has risen 21 per cent this year.

Top-15 shareholder Nick Train said he was impressed by the company’s new management, which he said had “a clear agenda and incentive to create value for shareholders”. He added that while the ice-cream unit was a “fine business”, he saw the logic in the spin-off.

“That is the world number one ice-cream company with the world’s leading brands, and objectively, it’s the sort of asset we might be interested in investing in anyway,” Train said.

At the capital markets day, Schumacher also announced a new company tagline — “Brighten everyday life for all” — a departure from the previous mission statement set out by former CEO Paul Polman, “to make sustainable living commonplace”.

Unilever has drawn criticism from its non-profit partners since it scaled back some of its ESG targets. But Schumacher told the FT the company’s spending on sustainability had increased year-on-year, although he declined to give an exact figure.

“I want to be careful that if I call out the number, that people say, oh, they’re spending so much on sustainability,” he said, pointing out that much of the spend is going towards compliance with regulation.

“I’m not going to look back and be apologetic about changes we made. I’m going to be on the front foot and hold people accountable,” he added.