TheChek News Flow

• Trump has repeatedly declared that controlling Greenland — the world's largest island — is necessary for U.S. national security vis-a-vis Russia and China. His son Don Jr. visited Greenland this week bearing MAGA hats.
• Climate change is opening up the Arctic for competition between superpowers, and could also make it easier to tap Greenland's mineral riches.
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• One European diplomat told Axios that Denmark is widely seen as one of the closest allies of the U.S. within the EU, and no one could have imagined it would be the first country with which Trump would pick a fight.

• In a press conference after the meeting Frederiksen said she asked for a meeting with Trump. Egede said he is also ready to talk to the president-elect.
• "Greenland is for the Greenlandic people. We do not want to be Danish, we do not want to be American. We want to be Greenlandic," Egede, an advocate for independence, said at the press conference.

• In the messages passed to the Trump team, the Danish government made clear Greenland was not for sale but expressed readiness to discuss any other U.S. request regarding the island, the sources said.
• The U.S. already has a military base on Greenland and an agreement with Denmark dating to 1951 on defending the island, under which an increase of U.S. forces could easily be discussed.

• Danish officials have already said they are looking into further measures to increase investment in military infrastructure and capabilities in Greenland, in consultation with the Greenlandic government.

• With new sea lanes opening up as climate change reshapes the Arctic, Greenland's geography is becoming all the more important.
• But if Trump's real concern is security, there's no reason the U.S. couldn't simply increase its military presence and capabilities in Greenland under its alliance with Denmark, contends Malte Humpert, a founder and senior fellow at the Arctic Institute.

• But Trump's continued comments about this issue, and his son's visit, mean Danish and Greenlandic officials can't rule out the possibility that Trump is quite serious.

Nvidia’s AI empire: A look at its top startup investments

No company has capitalized on the AI revolution more dramatically than Nvidia. Its revenue, profitability, and cash reserves have skyrocketed since the introduction of ChatGPT a little over two years ago — and the many competitive generative AI services that have launched since. And its stock price soared more than eightfold.

During that period, the world’s leading high-performance GPU maker has used its ballooning fortunes to significantly increase investments in all sorts of startups but particularly in AI startups.

The chip giant ramped up its venture capital activity in 2024, participating in 49 funding rounds for AI companies, a sharp increase from 34 in 2023, according to PitchBook data. It’s a dramatic surge in investment compared to the previous four years combined, during which Nvidia funded only 38 AI deals. Note that these investments exclude those made by its formal corporate VC fund, NVentures, which also significantly ramped up its investing in the last two years. (PitchBook says NVentures engaged in 24 deals in 2024, compared to just 2 in 2022.)

Nvidia has stated that the goal of its corporate investing is to expand the AI ecosystem by backing startups it considers to be “game changers and market makers.”

Of course, Nvidia is not the only large tech corporation writing checks to AI startups. But over the last two years, it was the most active. Compared to Nvidia’s 83 deals in two years (2023 and 2024), Alphabet participated in 73, while Microsoft has done 40 rounds, PitchBook data shows.

Below is a list of startups that raised rounds exceeding $100 million over the past two years where Nvidia is a named participant, organized from the highest amount to lowest raised in the round.

OpenAI: Nvidia backed the ChatGPT maker for the first time in October, reportedly writing a $100 million check toward a colossal $6.6 billion round that valued the company at $157 billion. The chipmaker’s investment was dwarfed by OpenAI’s other backers, notably Thrive, which according to the New York Times invested $1.3 billion.

xAI: Nvidia participated in the $6 billion round of Elon Musk’s xAI. The deal revealed that not all of OpenAI’s investors followed its request to refrain from backing any of its direct competitors. After investing in the ChatGPT maker in October, Nvidia joined xAI’s cap table a few months later.

Inflection: One of Nvidia’s first significant AI investments also had one of the most unusual outcomes. In June 2023, Nvidia was one of several lead investors in Inflection’s $1.3 billion round, a company founded by Mustafa Suleyman, who earlier founded DeepMind. Less than a year later, Microsoft hired Inflection AI’s founders, paying $620 million for a non-exclusive technology license, leaving the company with a significantly diminished workforce and a less defined future.

Wayve: In May, Nvidia participated in a $1.05 billion round for the U.K.-based startup, which is developing a self-learning system for autonomous driving. The company is testing its vehicles in the U.K. and the San Francisco Bay Area.

Safe Superintelligence: In September, Nvidia was a backer in the new startup founded by former OpenAI chief scientist Ilya Sutskever. The $1 billion round reportedly valued the new 10-person AI lab at $5 billion.

Scale AI: In May 2024, Nvidia joined Accel and other tech giants Amazon and Meta to invest $1 billion in Scale AI, which provides data-labeling services to companies for training AI models. The round valued the San Francisco-based company at nearly $14 billion.

Crusoe: A startup building data centers reportedly to be leased to Oracle, Microsoft, and OpenAI raised $686 million in late November, according to an SEC filing. The investment was led by Founders Fund, and the long list of other investors included Nvidia.

Figure AI: In February, AI robotics startup Figure raised a $675 million Series B from Nvidia, OpenAI Startup Fund, Microsoft, and others. The round valued the company at $2.6 billion.

Mistral AI: Nvidia invested in Mistral for the second time when the French-based large language model developer raised a $640 million Series B at a $6 billion valuation in June.

Cohere: In June, Nvidia invested in Cohere’s $500 million round, a large language model provider serving enterprises. The chipmaker first backed the Toronto-based startup a year prior.

Perplexity: Nvidia first invested in Perplexity in November of 2023 and has participated in every subsequent round of the AI search engine startup, including the $500 million round in December, which values the company at $9 billion, according to PitchBook data.

Poolside: In October, the AI coding assistant startup Poolside announced it raised $500 million led by Bain Capital Ventures. Nvidia participated in the round, which valued the AI startup at $3 billion.

CoreWeave: Nvidia invested in the AI cloud computing provider in April 2023, when CoreWeave raised $221 million in funding. Since then, CoreWeave’s valuation has jumped from about $2 billion to $19 billion, and the company reportedly has its sights on a $35 billion IPO this year. CoreWeave allows its customers to rent Nvidia GPUs on an hourly basis.

Sakana AI: In September, Nvidia invested in the Japan-based startup, which trains low-cost generative AI models using small datasets. The startup raised a massive Series A round of about $214 million at a valuation of $1.5 billion.

Imbue: The AI research lab that claims to be developing AI systems that can reason and code raised a $200 million round in September 2023 from investors, including Nvidia, Astera Institute, and former Cruise CEO Kyle Vogt.

Waabi: In June, the autonomous trucking startup raised a $200 million Series B round co-led by existing investors Uber and Khosla Ventures. Other investors included Nvidia, Volvo Group Venture Capital, and Porsche Automobil Holding SE.

Ayar Labs: In December, Nvidia invested in the $155 million round of Ayar Labs, a company developing optical interconnects to improve AI compute and power efficiency. This was the third time Nvidia backed the startup.

Kore.ai: The startup developing enterprise-focused AI chatbots raised $150 million in December of 2023. In addition to Nvidia, investors participating in the funding included FTV Capital, Vistara Growth, and Sweetwater Private Equity.

Weka: In May, Nvidia invested in a $140 million round for AI-native data management platform Weka. The round valued the Silicon Valley company at $1.6 billion.

Runway: In June of 2023, Runway, a startup building generative AI tools for multimedia content creators, raised a $141 million Series C extension from investors, including Nvidia, Google, and Salesforce.

Bright Machines: In June 2024, Nvidia participated in a $126 million Series C of Bright Machines, a smart robotics and AI-driven software startup.

Vast Data: The startup that provides storage solutions for AI and data analytics raised a $118 million Series E at a $9.3 billion valuation in December of 2023. That was the third time Nvidia invested in Vast Data.

Enfabrica: In September 2023, Nvidia invested in networking chips designer Enfabrica’s $125 million Series B. Although the startup raised another $115 million in November, Nvidia didn’t participate in the round.

Opposition leader has capitalised on anti-Trudeau sentiment while attracting Trump supporters across the border

Pierre Poilievre has long known what he would do if elected Canada’s Prime Minister.

As a 20-year-old in 1999, he won a $10,000 prize for an essay on the topic of “As Prime Minister I would . . . ” in which he warned that “Canadian political institutions have caused our democracy to wither”, and argued for personal freedoms and wholesale tax reform.

A quarter of a century later Poilievre is closer to putting that populist vision into action after Prime Minister Justin Trudeau announced plans to leave office after nearly a decade in power.

“We’ll cap spending, axe taxes, reward work, build homes, uphold family, stop crime, secure borders, rearm our forces, restore our freedom and put Canada First,” the Conservative party leader said after Trudeau’s resignation speech on Monday.

While there are still several months to go before an election will take place, the Conservative leader has a comfortable 27 per cent lead in the polls, leaving him in a strong position ahead of a spring campaign.

His views have also caught the attention of president-elect Donald Trump’s supporters south of the border in the US.

Bill Ackman, the Trump-backing billionaire hedge fund manager in December posted on X that Poilievre should be the next prime minister, “the sooner the better”.

Like Trump, Poilievre has embraced Conservative male podcasters, including Ben Shapiro and Jordan Peterson, who amplify his “common sense” message to millions of listeners around the world.

X owner and billionaire Elon Musk, who repeatedly mocks Trudeau, regularly tweets his support for Poilievre, while Joe Rogan, the world’s most popular podcast host, said last year the opposition leader “makes so much more sense”.

In a recent podcast interview, Poilievre told Peterson that “the problem we’ve had in this country, and all the countries affected by this horrendous, utopian wokeism, is that it has been focused on the grandiosity of the leadership . . . and not the things that are grand and great about the common people”. 

Poilievre won the Conservative leadership in 2022 after years as a minister in former prime minister Stephen Harper’s Conservative government, which was in power from 2006 to 2015.

He has united the party and moved it further to the right, promising to reverse the progressive liberal agenda of the Trudeau government. He is fond of pithy pledges to “axe the tax” — or ditch a controversial carbon levy — and “jail, not bail” — imposing tougher sentences for criminals. He wants to defund the CBC, the publicly funded Canadian Broadcasting Corporation.

Like Trump to the south, Poilievre believes energy — both renewable and fossil fuels — can create jobs and rescue the economy. But he also argues Canada’s abundance of oil is “underpriced’ and underulitilised in geopolitics because there is only one pipeline that does not head straight to the US.  

Trump should approve the controversial Keystone XL, now mothballed, that could pump nearly 800,000 barrels of oil a day from Alberta’s oil sands region, he said.

Canadians’ frustration with the Trudeau government over their stagnating economy has offered a rich seam to exploit. Inflation soared to 7 per cent in 2022 — although it has now returned to the bank of Canada’s 2 per cent range — and unemployment is about 7 per cent.

The country would be in recession if not for population growth through immigration policies that Trudeau was forced to reverse after a public backlash.

In March 2024, there were more than 2mn visits to food banks in Canada — the highest number in history — a 90 per cent increase compared with 2019, according to the NGO Food Banks Canada.

Dan Nowlan, a former senior aide in the Harper government, said Poilievre had excelled at connecting with Canadians who are feeling worse off.

“What Poilievre says resonates. He talks like he’s been in a hockey rink. He comes across as a normal person. Trudeau is from another universe that Canadians just don’t identify with,” he said.

This difference was seen in early 2022 when Trudeau and his government invoked unprecedented emergency powers to crack down on so-called “Freedom Convoys” protesting against mandatory pandemic measures such as vaccines.

Poilievre seized the opportunity to support the protesters and criticise the government as elitist and out of touch with ordinary Canadians.

His plain speaking image is bolstered by his background. Unlike Trudeau, who comes from a Canadian political dynasty (his father Pierre served two terms as prime minister from 1968 to 1979, and 1980-84), Poilievre was adopted by two schoolteachers from a French speaking minority in the western province of Alberta.

Ginny Roth, who ran Poilievre’s leadership campaign communications strategy, said he is “fearless” and uses “straight talk, cutting past the bullshit” that Canadians crave.

“He focused on inflation before anyone else, started fighting the Nimbys before anyone else, and realised the carbon tax wasn’t a settled debate, all big winner issues for him,” she said.

But comparisons with Trump’s Maga movement only go so far. Poilievre supports immigration and multiculturalism and claims to be against corporate interests. He argues his agenda is not extreme but a response to Trudeau’s “radical extreme socialist policies” that divided and broke the country.

He has also distanced himself from Trump since the president-elect said the US should annex Canada.

“Canada will never be the 51st state. Period,” Poilievre said on Tuesday.

And while Poilievre is ahead in the polls and is predicted to be the winner in the next election, he does not inspire the same enthusiasm as Trump.

“There is no Poilievre mania in Canada,” said David Coletto, chief executive of Abacus Data. “Young men are Poilievre’s number 1 fan base. Hence why the interview with Jordan Peterson,” he said.

“He’s the only federal leader which more people like than dislike.”

It certainly was a big week — with companies having to raise more than $100 million to make the list. Biotech- and healthcare-related startups led the way — as those companies dominate the list, taking a vast majority of spots. However, as usual, a company with AI ties is on top.

1. DDN, $300M, data storage: Data is the big-money game right now. Private equity giant Blackstone Group is making a $300 million strategic investment into DDN, valuing the Chatsworth, California-based data storage company at $5 billion. Founded in 1998, DDN — formerly called DataDirect Networks — helps companies store, analyze and manage data — a value commodity as more businesses look to create and train AI models. The company plans to use the new cash to expand in industries ranging from healthcare to autonomous vehicles and accelerate product innovation, including for its AI data intelligence platform. Of course this is far from the only play the Blackstone Group has made in the data sector. Last year it was reported the world’s largest asset manager plans to invest $8.2 billion to develop data centers in Spain. In 2023, it partnered with Digital Realty to develop $7 billion in data centers targeting providers of online content, cloud services and artificial intelligence. Blackstone also is a backer of CoreWeave, an AI infrastructure startup that gives access to highly sought-after AI chips from Nvidia.

2. Innovaccer, $275M, healthcare: San Francisco-based Innovaccer could be listed as artificial intelligence or health care, as the company is looking to be the “one stop shop” for healthcare AI solutions. Innovaccer — which helps healthcare organizations by providing software solutions that aim to improve patient experience and reduce the administrative burden on providers — raised a $275 million round that was a combination of primary and secondary. No lead investor was announced, but investors included B Capital and Kaiser Permanente. Founded in 2014, the company has raised $654 million, per Crunchbase.

3. Whatnot, $265M, e-commerce: While most of us are looking to cut back on our spending after the holidays, investors clearly think people want to spend more money on livestream shopping platform Whatnot. The Los Angeles-based startup raised a $265 million Series E at a valuation of nearly $5 billion. The round was co-led by Avra, DST Global and Greycroft. Whatnot’s annual gross merchandise value for livestream sales surpassed $3 billion last year. Founded in 2019, Whatnot has raised approximately $746 million, per the company.

4. Aviceda Therapeutics, $208M, biotech: It may be a new year, but biotech is still raising big. Cambridge, Massachusetts-based Aviceda Therapeutics, a biotech company focused on developing immunomodulators to alleviate chronic inflammation, announced the closing of a $207.5 million Series C co-led by Omega Funds and TCGX. Founded in 2018, the company has raised $277 million, per Crunchbase.

5. Tenvie Therapeutics, $200M, biotech: South San Francisco-based Tenvie Therapeutics, a biotech looking into treatments of neurological diseases, launched with $200 million in funding led by Arch Venture Partners, F-Prime Capital and Mubadala Capital.

6. Timberlyne Therapeutics, $180M, biotech: San Diego-based Timberlyne Therapeutics, a biopharmaceutical startup focused on the development of therapies for autoimmune disorders, closed a $180 million Series A led by Abingworth, Bain Capital Life Sciences and Venrock Healthcare Capital Partners. This is the company’s first funding, per Crunchbase.

7. Inari, $144M, agtech: Cambridge, Massachusetts-based Inari, a startup that designs more sustainable seeds for agriculture, locked up a $144 million round. No lead investor was named, but the company did say one of the new investors is a wholly owned subsidiary of the Abu Dhabi Investment Authority. The company is focused on creating new seeds for large-acre crops with its first wave of products — which includes soybeans, corn and wheat. Founded in 2016, Inari has raised $720 million, per the company.

8. Hippocratic AI, $141M, artificial intelligence: Palo Alto, California-based Hippocratic AI, which develops a safety-focused large language model for healthcare, safety and accuracy, raised a $141 million Series B valuing the company at $1.6 billion. The round was led by Kleiner Perkins. Founded in 2023, the company has raised $276 million, per Crunchbase.

9. Evergreen Nephrology, $130M, healthcare: Nashville, Tennessee-based Evergreen Nephrology, which provides care to those suffering from chronic kidney disease, raised a $130 million round led by Oak HC/FT, Rubicon Founders and a group of existing investors. Founded in 2021, the company has raised $134 million, per Crunchbase.

10. Ouro Medicines, $120M, biotech: San Francisco-based Ouro Medicines, a biotech developing immune reset therapeutics for people living with chronic immune-mediated diseases, launched with a $120 million Series A co-led by New Enterprise Associates, Norwest Venture Partners and TPG.

The biggest funding outside the U.S. went, of course, to another biotech firm.

Exotic animals from a leopard tortoise to a sea lion have moved in and out of 70-year-old’s life, but falcons never left

WASHINGTON—When Robert F. Kennedy, Jr. gathered his 2024 presidential campaign team for a meeting, he elbowed his neighbor to point at the window: several falcons were flying through the air.

Long before he was a vaccine skeptic, presidential candidate and president-elect Trump’s pick to lead the Health and Human Services Department, Kennedy got hooked on falconry. The sport, in which wild birds of prey are trained to hunt with their handlers, hasn’t let go.

So central is falconry to Kennedy’s identity that a ballot access lawsuit last year challenging his claim that he lived in New York involved a debate over whether he had a valid falconry license in California.

Kennedy argued that while his three dogs and an emu moved to the Malibu home he shared with his wife, actress Cheryl Hines, his roughly 20 hawks and falcons stayed in New York. Kennedy, 70, said his life in California was temporary and suggested someone else had signed the license application on his behalf.

Opposing lawyers showed a social media clip of ravens he was teaching to eat out of his hand on the balcony of his California abode.

“I trained them to come when I called them and also to talk and also to do certain tricks—mainly take like a poker chip and put it in somebody’s pocket,” Kennedy said in court of his history training the birds. Ravens, he noted, after a year or so of training can “talk like a parrot.”

The judge sided against Kennedy, finding his “testimony that he may return to that [New York] bedroom to reside with his wife, family members, multiple pets, and all of his personal belongings to be highly improbable, if not preposterous.”

Kennedy has courted controversy before with his exotic animals. He famously said he left a dead bear cub in Central Park a decade ago, noting he had initially planned to keep the meat in his fridge.

“The Bear, The Penguin, Baby Reindeer. These are not just things found in R.F.K.’s freezer,” comedian Nikki Glaser said, referring to television shows at the Golden Globes awards ceremony this month.

Kennedy kept a coatimundi, a member of the raccoon family, in the basement playroom of his childhood house, until it assaulted his pregnant mother, sending her into premature labor, he wrote in his memoir “American Values.”

After a trip to East Africa in 1964, Kennedy wrote that he brought home a 16-pound leopard tortoise named Carruthers in a Gucci suitcase lent to him by his mother “which could not be used thereafter.”

The family briefly kept a California sea lion named Sandy in its pool, though Kennedy wrote Sandy would ride in the car with his mother for school pickups. After Sandy started roving with the family dogs and caused a “rush-hour traffic jam” in McLean, Va., the sea lion was donated to the zoo.

Kennedy found his true passion at the age of 11, when he read T.H. White’s “The Once and Future King,” a retelling of King Arthur’s adventures, including with a goshawk, a large hawk. Kennedy found a local falconer, Alva Nye, an aircraft acquisition specialist for the Defense Department, to teach him the fundamentals. Nye instructed Kennedy not only how to hunt with raptors but also how to care for them, said his son, Geoff Nye.

“It’s not like having a cat or a dog, I’ll tell you that,” Nye said. “They require very careful management of their health.”

“There’s not been any time in my life really since then that I haven’t had birds and haven’t been involved in the sport,” Kennedy said in a video posted to Instagram last year. “It’s kind of like being allowed to hunt with a wolf pack—if the wolves would actually allow you to go out with them.”

His bird bible was Holy Roman Emperor Frederick II’s manual on falconry, written shortly before 1250, that enumerated the life skills a falconer should possess, including nimbleness, a daring spirit, an imperviousness to hunger, heat and cold, a tendency to sleep lightly “so as to hear his falcon bells” and a strict prohibition against laziness. “These became my blueprints for living,” Kennedy wrote in his memoir.

As a child, Kennedy said he watched for peregrine falcons at the Justice Department, where his father, Robert Kennedy, worked as the Attorney General, and the White House, when his uncle, John F. Kennedy, was president. (The nest remains at the nearby Waldorf Astoria, a Hilton spokeswoman said.)

“He has a very intense appreciation for the natural world and this is just an extension of that,” said Steve Layman, a longtime falconer who has gone hawking, the term used for hunting with wild raptors, with Kennedy.

In the late 1980s, Kennedy wrote the New York state falconry study guide and exam manual.

As Kennedy turned to politics, he continued to draw on his falconry experience. Ahead of his 2024 presidential run, he met one of his senior campaign advisers at a falconry event he organized.

After endorsing Trump, Kennedy participated in a sweepstakes where winners could join him and Donald Trump Jr. for an October day of falcon hunting in the Hudson Valley. For $50,000, donors could also reserve their spot to “experience nature’s fiercest predators alongside two of America’s bravest personalities.”

Kennedy’s avian interests also extend to pigeons, which as a child, he said he would put on a train going to Delaware and time how long it took them to fly back to his home in Virginia. On boxer Mike Tyson’s podcast, he said that observing and interacting with birds never grows old for him.

“I could sit and watch pigeons for weeks and not get bored,” he said.

A rare ‘bear steepening’ trade is pressuring governments and worrying investors

Wall Street is really worried about bonds. It might be time to buy some.

On Friday, a jobs report that blew past expectations pushed yields on 10-year Treasurys to 4.772%, the highest close since Nov. 1, 2023, and those on 30-year paper to 4.962%.

What is spooking markets, however, is that much of the recent rise in yields doesn’t appear to reflect expectations of stronger economic growth. Rather, it might be the result of investors applying a higher discount or “term premium” to hold long-term bonds, estimates by the Federal Reserve suggest. Some analysts attribute this to the possibility of Donald Trump’s promised tariffs derailing the global economy and leading to a jump in inflation, while his tax cuts bloat budget deficits further.

Movements in term premiums are usually strongly correlated across the globe, and the consequences are being felt more starkly in weaker economies overseas, especially in Britain. There, 30-year yields are trading around 5.4%, a 27-year high. U.K. Treasury chief Rachel Reeves, who has made a public pledge to appease bond markets while also attempting to set out some moderate growth ambitions in her latest budget, is under strong pressure.

France is also in the hot seat: The government is shackled by a parliamentary deadlock, and now has borrowing costs firmly above those of Greece.

In a further sign of trouble, the pound and the euro are falling, with the latter sliding close to parity with the U.S. dollar. The S&P 500 and the Stoxx Europe 600 ended Friday down 1.5%, and 0.8%, respectively.

But counterintuitively, bonds may ultimately prove to be the safest place amid the storm.

For one, the fiscal doomsayers are probably wrong: Countries that print their own currency can’t truly be pushed to default. More important, inflation-linked Treasurys have sold off too, belying the idea that markets see a hot economy and tariffs as a serious inflationary problem.

It might all have to do with interest rates after all. Since December, the Fed has squashed expectations of a prolonged rate-cutting cycle. As a result, the whole middle part of the Treasury yield curve—from two to five-year maturities—has become positively sloped for the first time since 2022. Only the very short end, from three months to one year, remains inverted, reflecting the one or two cuts that markets suggest might still happen this year.

The reason alarm bells are ringing is that longer-term bonds have sold off even more—a “bear steepening” trade, in Wall Street lingo. Three out of four times, yield curves steepen for the opposite reason, historical data shows: A fall in short-term yields driven by central banks cutting rates very fast. Bear steepenings following a period of inverted yield curves are rare, and mostly are reminiscent of the “stagflation” periods of the 1970s and 1980s.

But this gets to the core of the matter. Today’s situation, in which central banks have been able to aggressively raise rates without harming the economy, then slowly cut them while launching hawkish messages, is nearly unprecedented.

Keeping this in mind, what is happening to bonds makes sense. Fixed-income investors have ruled out a “hard landing” for the economy, and have been persuaded by officials that returns on cash probably won’t dip below 3.5% for the foreseeable future. They have thus started demanding a larger reward to lock up their money for longer.

This term premium still isn’t huge: It is reportedly adding 0.6 percentage point to 10-year yields, when the historical average is 1.5 percentage points. The steepness of most of the yield curve remains mild by historical standards.

So why did stock markets react so negatively on Friday? One key factor might be stretched valuations. After years of technology-led rallies, the S&P 500 has become so expensive that, even if analysts’ optimistic outlook for 2025 is realized, its one-year forward earnings yield has fallen to 4.6%—the same as the yield of a 5-year Treasury. This explains why equity holders are increasingly seeing bonds as competition, especially for medium-term investment horizons.

To be sure, this doesn’t rule out the possibility that yields could rise further, or that high yields themselves could have a negative impact on economic growth, especially abroad.

Were growth and corporate earnings to truly suffer, though, central banks would need to change course and go into stimulus mode. Guess which asset class gains in that scenario: Bonds.

Stephen Miran, nominated to advise Trump, has suggested high tariffs could be the price allies pay for U.S.’s defense umbrella

To serve as an economic adviser to Trump, it helps to share his belief that tariffs make the U.S. richer. Not many economists meet that criterion.

Stephen Miran has made just that case. Miran, nominated to chair Trump’s Council of Economic Advisers, has written that the U.S. could be better off with average tariffs of around 20% and as high as 50%, compared with the current 2%.

Miran’s views are worth studying, and not just because he’s going to advise Trump. He has described tariffs as a tool, and international intervention to weaken the dollar as another, that could address a longstanding global tension: the U.S.’s economic and military support for other countries have contributed to an overvalued dollar, wide trade deficit and hollowed-out industrial base.

“Sweeping tariffs and a shift away from strong dollar policy can have some of the broadest ramifications of any policies in decades, fundamentally reshaping the global trade and financial systems,” Miran wrote in a November report for Hudson Bay Capital, where he is senior strategist.

Miran wrote the report “A User’s Guide to Restructuring the Global Trading System” before he was named in late December as Trump’s choice to chair the CEA, the White House’s in-house economic think tank.

The report, Miran wrote, reflected his views, not Trump’s, and is intended not as policy advocacy but to “understand the range of possible policies that might be implemented.”

Miran, 41, earned his Ph.D. in economics from Harvard University in 2010 and he has since worked in financial markets and is a fellow at the conservative Manhattan Institute.

While novel, his arguments—including for tariffs—are grounded in orthodox economics. Miran is not a contrarian who assumes “all academics must be wrong,” said David Cutler, a Harvard economist who served in the Clinton administration and was one of Miran’s Ph.D. advisers. He’s “guided by the theory and evidence.”

That doesn’t mean his proposals would work. His report acknowledges a high risk that they won’t: “There is a path by which these policies can be implemented without material adverse consequences, but it is narrow.”

Economists agree that trade enables a country to both consume and produce more, and tariffs leave it worse off. Yet in the decades after Adam Smith made the definitive case for free trade in 1776, economists identified conditions under which a country might be better off imposing a tariff.

Suppose an importer is a monopsonist—a dominant enough buyer to influence the price it pays (just as a monopolist influences the price at which it sells). It could impose a $10 tariff on an imported widget, and its price, instead of rising $10, would stay the same because the exporter lowered its own price by $10 to avoid losing market share.

So consumers are unscathed. Even if they pay a bit more, that might be more than offset by tariff revenue. The rate that maximizes this net benefit is called the “optimal tariff.” Miran cites research by Arnaud Costinot of the Massachusetts Institute of Technology and Andrés Rodríguez-Clare of the University of California, Berkeley, that a tariff of around 20% is optimal, and up to 50% could still leave the U.S. better off.

This represents an argument for higher tariffs as a goal in and of themselves, in contrast to some Trump allies’ defense of tariffs as a negotiating tactic.

An optimal tariff policy is explicitly “beggar-thy-neighbor”: one country benefits only by hurting another. Since World War II, as the world pursued reciprocal tariff reductions, “it’s hard to find real life examples of countries motivated to pursue it in a systematic, and deliberate, way,” said Doug Irwin, a trade historian at Dartmouth College.

Optimal tariff theory has some real-world drawbacks. It doesn’t seem borne out by Trump’s tariffs on China. In an interview, Costinot noted that studies found the tariffs were mostly passed through to American importers. (Miran’s report disputed those studies.)

f other countries retaliate, as China, the European Union, Mexico and Canada did in 2018, the tariff is no longer optimal: Both sides lose. “Retaliatory tariffs by other nations can nullify the welfare benefits of tariffs for the U.S.,” Miran acknowledged.

To deter retaliation, he wrote that the Trump administration could “declare that it views joint defense obligations and the American defense umbrella as less binding or reliable for nations which implement retaliatory tariffs.” In other words, the U.S. might not defend Japan, South Korea or a fellow NATO member that retaliated.

Another problem: Tariffs only leave the U.S. better off if import prices barely rise. But in that case, consumers have no incentive to switch from imported to domestic goods, which nullifies Trump’s aim of boosting American manufacturing.

Yet another caveat is that tariffs might not reduce the trade deficit because the dollar rises in response, which makes imports cheaper and exports less competitive.

As an alternative to tariffs, Miran said the U.S. could weaken the dollar through a “Mar-a-Lago Accord,” modeled on the 1985 Plaza Accord in which the U.S. and its allies jointly acted to drive down the dollar. “After a series of punitive tariffs, trading partners such as Europe and China become more receptive to some manner of currency accord in exchange for a reduction of tariffs,” he wrote. Or, the U.S. could impose a user fee on buyers of Treasury debt.

If this triggers selling of long-term bonds, the Federal Reserve might have to buy them to limit upward pressure on long-term interest rates, Miran wrote. The Fed is more likely to cooperate with the Treasury on currency and bond interventions in return for independence on monetary policy, he wrote. (Trump has demanded more say on monetary policy. Miran has elsewhere proposed the president and state governors have more control over the Fed’s governance.)

A major question is whether a threat to withhold the defense umbrella from countries that don’t cooperate would be effective. The U.S. has no defense alliance with Mexico, Vietnam or China which account for half the U.S. trade deficit.

On Tuesday, Trump declined to rule out military force to pry Greenland from Denmark, and that he would use “economic force” to annex Canada. Both are fellow NATO members. Allies may conclude from Trump’s repeated threats against them that the U.S. defense guarantee no longer exists. Russia and China may draw the same conclusion, and seize the opportunity to increase aggression against their neighbors.

Miran himself dryly acknowledged “potentially volatile…consequences.”