The Information : OpenAI Fires Employee for Prediction Market Trades

OpenAI Fires Employee for Prediction Market Trades
Markets about AI products have become common on Polymarket and Kalshi.

OpenAI earlier this year fired an employee for trading on prediction markets using confidential company information in violation of company policies after an investigation, according to a spokesperson for the company. CEO of Applications Fidji Simo announced the termination to employees earlier this year, the spokesperson said.

Insider trading on prediction markets is on the rise as platforms like Kalshi and Polymarket, which allow users to place small bets on the outcome of events from AI model releases to sporting events, grow in popularity.

Earlier this week, Kalshi announced that it has suspended and fined two accounts for insider trading.

Wired first reported the news of the termination.

FT : US not planning to tap strategic reserve as Iran war risks oil surge

US not planning to tap strategic reserve as Iran war risks oil surge
Trump administration holding ‘no discussions’ about using stockpiles to soothe energy markets

The US is not considering releasing oil from its strategic petroleum reserve, signalling Washington believes any surge in prices following its attack on Iran will be limited.

There have been “no discussions at all about the SPR”, a Department of Energy official told the FT, when asked about preparations the Trump administration had made to prevent a surge in crude prices that could dent the economy and send consumer prices higher.

Oil prices are expected to jump on Sunday when markets reopen at 6pm in New York as traders react to concerns the war could disrupt oil supplies in the Middle East. Brent, the international benchmark, settled at $72.87 a barrel on Friday.

The US strategic reserve holds about 415mn barrels of oil, a portion of which could be drawn down to soothe markets as was the case in 2022 when Russia’s invasion of Ukraine pushed prices higher.

While the SPR is a valuable tool that can help to calm international markets in a crisis, it could not prevent a price shock if Iran closes the Strait of Hormuz — a narrow passage through which 20 per cent of the world’s oil supply flows.

Iranian media on Saturday reported the strait had been “effectively” closed after the country’s elite Revolutionary Guards warned some vessels that passage through it was unsafe.

Although vessels have continued to transit the strait since the attacks began this morning, transponder data from MarineTraffic suggests the flow among large commercial vessels making the journey is falling away, particularly for ships travelling westward into the Gulf.

Kevin Book, research director at ClearView Energy Partners, a Washington-based consultancy, said: “The US SPR still has plenty of oil to flow in an emergency, but when it comes to strategic stocks, duration matters. Scale does, too. A full Hormuz crisis could outstrip offsets provided by strategic stocks in the US and International Energy Agency members.”

Members of Opec+, the oil producer group, could decide to significantly increase their output in an attempt to calm the markets, said analysts and people familiar with the discussions.

A meeting scheduled for Sunday was widely expected to approve an increase of 137,000 barrels a day for April, but one person close to Opec+ suggested members could greenlight an increase of three or four times that sum.

Book said: “We already expected the eight Opec+ countries participating in voluntary production cuts to add supply back to the market at their scheduled meeting tomorrow and today’s hostilities could spur a bigger addition.”

Michael Alfaro, chief investment officer of hedge fund Gallo Partners, which is focused on energy and industrials, added that, “I think we are going to get a spike in the oil price but it it’s not going to go over $100 because Opec is likely going to announce emergency supply additions.”

Washington set up the strategic reserve in the aftermath of the 1973-74 oil embargo when Arab members of Opec cut off supplies to western countries supporting Israel during the Yom Kippur war. The embargo caused oil prices to almost quadruple and pushed the global economy into recession.

FT : Eight former UK energy ministers call for U-turn on oil and gas

Eight former UK energy ministers call for U-turn on oil and gas
Cross-party group says current policy is worsening power security while doing little to cut global emissions

Eight former UK energy ministers have called for the government to curb restrictions and taxes on the North Sea oil and gas industry, arguing that current policy is worsening energy security while doing little to cut global carbon emissions.

The cross-party group — which includes former Tory energy secretary Amber Rudd and one-time Labour business and energy secretary Lord John Hutton — expressed their “deep concern” over the decline of UK oil and gas production. 

“The premature curtailment of domestic production is not primarily the result of geology but of policy decisions made by both Labour and Conservative governments,” they said in a letter to Prime Minister Sir Keir Starmer. “Energy security is national security. Without urgent reform we will become increasingly reliant on imported liquefied natural gas.”

They called for the government to end sooner the windfall tax on the oil and gas sector and to drop the ban on new exploration licences in the North Sea.

“With such substantial resources still available to the UK, it makes no sense at all to pursue policies which will only increase our energy imports,” former Tory energy minister Charles Hendry told the FT. “We are calling on the Government to allow new drilling licences that will maintain UK energy security, protect jobs, generate revenue and attract investors back to the North Sea.”

The letter adds to calls on the UK government to change course on the North Sea, including from industry lobbyists, the GMB industrial union and the Tony Blair Institute think-tank. 

The current government has stopped the issuing of new exploration licences as part of its push towards lower-carbon energy sources to tackle climate change, although some projects linked to existing fields are still being allowed. Labour ministers have also extended a windfall tax introduced in 2022; it will now end in 2030 unless prices fall below a certain threshold before then. 

Labour argues that the North Sea is in natural decline after decades of production and it is trying to help the sector evolve by moving into areas such as offshore wind and carbon capture. Energy secretary Ed Miliband has also said that increasing drilling in the North Sea would not cut bills as energy prices are set on the international market. Supporters of Labour’s policies also argue that Britain should set an example in showing how to shift from oil and gas to renewable energy.

But critics say the policies have accelerated the natural decline of the ageing North Sea basin, leaving the UK vulnerable and more reliant on imports because it still uses oil and gas for about 75 per cent of its total energy needs. 

Even if Britain were to reach net zero by 2050, the country is still expected to use some fossil fuels, with the emissions captured and stored.

The letter’s signatories also include Graham Stuart and Greg Hands, energy ministers in the last Conservative government; Brian Wilson, Labour energy minister in the early 2000s; Tim Eggar, who was a Tory energy minister in the 1990s and later chaired the North Sea Transition Authority Regulator until 2024; and Fergus Ewing, former energy minister in the Scottish government.

Rudd, the former UK energy secretary who also signed the letter, is currently on the board of Centrica, the FTSE 100 owner of British Gas, Britain’s second largest household energy supplier.

Hendry is a distinguished fellow of the Atlantic Council Global Energy Center, a non-profit organisation that has received funding from various states, foundations and corporations including the US and UK governments and oil companies Chevron and Exxon.

As well as calling to reverse the licences and the windfall tax, the former ministers also want the government to give Equinor and Shell permission to develop two giant new oil and gasfields, Rosebank and Jackdaw. The previous government awarded permission, but this was quashed by a court which said the climate impact had not been properly considered. 

A government spokesperson said its plans for the Energy Profits Levy would give “the sector and its investors the long-term certainty to plan, invest and support jobs”, adding: “We are also making sure the North Sea has a prosperous and sustainable future through record investment that helps deliver the next generation of skilled jobs while growing the clean energy industries of the future.”

FT Lex : AI models, like capitalism, are best served with a conscience

AI models, like capitalism, are best served with a conscience
Some companies think users would prefer products with morals pre-installed

Imagine a car that won’t let the driver go above the speed limit. It sounds simple enough, yet there isn’t much demand for a machine that takes moral decisions away from the user. Even Tesla’s speed limit-obeying “Sloth” model is optional; users of its self-driving cars can also go full “Mad Max”.

In the world of AI, some companies think customers would prefer products with morals pre-installed. Take Anthropic, whose Claude chatbot is trained to “have good values”. This is making Anthropic unpopular in some quarters. The US Department of Defense has protested against limits that would disallow self-directed lethal strikes or mass snooping on citizens — a dispute that on Friday was headed towards a tense stand-off.

Rivals are, meanwhile, trying to undermine Anthropic’s safety-first creds, which it exhibits through a “constitution” that tells Claude to prioritise safety, ethics and helpfulness in that order. OpenAI’s Sam Altman has branded the company “authoritarian”. Elon Musk, founder of xAI and the Grok chatbot, called it “misanthropic” for what he claims is bias against white men, among others.

Do customers care? After all, Anthropic’s real growth driver, accounting for some 80 per cent of revenue, is selling tools to corporate users focused mainly on efficiency and profit. Whether the AI would push the nuclear button, as researchers at King’s College suggest it sometimes would, is of little direct import to such customers.

Investors certainly don’t think Anthropic’s ethical stylings a hindrance. The company just raised money at a $350bn valuation and may seek to go public later this year. The effectiveness of Claude Code, its programming aide, has helped knock $1tn off the combined value of S&P 500 software stocks this year. Anthropic’s claim that Claude can code in COBOL, a clunky language used in IT mainframes, shaved $30bn off IBM’s market capitalisation in a single day.


There is one area where a bot’s integrity does matter today: hallucinations. Peter Gostev of AI evaluation outfit Arena has published a “bullshit benchmark” that tests whether models challenge nonsensical questions or simply respond with more hogwash. Anthropic’s scored best; some of OpenAI’s were among the worst. Even then, that may have more to do with a model’s quality of analysis than its inherent views on truthfulness.

The shift to agentic AI — bots that don’t just assist but actually execute tasks and exert judgment — will raise the stakes. As AI gets more humanlike, and its role within the company gets more senior, how it responds to complex challenges and conflicts will matter more. When is it better to ignore a command? When could pursuing a short-term goal lead to longer-term problems? When is it OK to tell the boss to “shove it”?

For better or worse, it’s really no different to what companies seek in their employees. For less critical and more process-driven jobs, employers seek workers who follow rules. At senior levels, where an individual’s actions can affect the value of the whole firm, good judgment in unusual situations becomes valuable, and commands higher pay.

Of course, whether a company’s fundamental view of “ethical” will correspond with Anthropic’s is up for debate. One day an agent will be asked to do something bad for the world but good for a company’s profit. A model that puts a premium on good behaviour ought to be more valuable; in the real corporate world, one that prized shareholder value even more would no doubt clean up.

FT : Greg Abel tells Berkshire investors its cash pile is not a retreat from dea

Greg Abel tells Berkshire investors its cash pile is not a retreat from dealmaking
New chief executive publishes his first letter to shareholders after Warren Buffett’s retirement

Berkshire Hathaway’s new chief executive Greg Abel on Saturday said that he was committed to retaining the $1.1tn conglomerate’s fortress-like balance sheet, and that its massive cash holdings did not signal a retreat from dealmaking.

Abel used his first letter to shareholders to underscore his investment bona fides and his commitment to the principles that predecessor Warren Buffett had long extolled.

Abel, who took over in January, cast himself as a steward of Buffett’s legacy and signalled that the company’s investment philosophy was not changing.

He told shareholders that Berkshire had been active in evaluating new investments and that it would remain a key port of call when companies wanted to sell. The Nebraska-based conglomerate would be “an asset, not a risk, to America and the global financial system”, he wrote.

“Our balance sheet is a strategic asset to be deployed at the right time,” he wrote. “It allows us to act decisively, invest when others are tentative or fearful, and stand firm when financial storms roll through.”


The 63-year-old said share repurchases would remain an “important capital allocation option” and the company would not pay a dividend so long as he and the board believed Berkshire could generate shareholder value with that capital.

Berkshire’s cash levels stood at $373bn at year-end, a record when excluding the value of Treasuries it had previously bought but had not yet paid for.

“Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing,” Abel wrote. “It does not.”

He pointed to Berkshire’s $9.7bn purchase of the chemicals business of Occidental Petroleum, which it completed earlier this year, as well as its agreement to buy pest control business Bell Laboratories.

“There will undoubtedly be incremental opportunities to deploy our owners’ capital without compromising Berkshire’s resilience,” Abel wrote. “My role is to ensure our liquidity levels and capital deployment remain intentional and deliberate.”

He added: “We will always aim for ownership of productive businesses over US Treasuries.”


Investors and analysts traditionally scour Berkshire’s annual letters for insights into how the so-called Oracle of Omaha saw the world. In the past they were filled with Buffett’s personal anecdotes. He also used the missive to highlight key Berkshire staff, including Abel, which shareholders saw as an indication of an individual’s star rising within the notoriously decentralised company.

Abel said that Buffett continued to come into the office five days a week and was “available to us”. But he has begun to reshape Berkshire’s corporate headquarters. The company last year hired its first internal legal counsel and announced a top executive from Berkshire’s energy business, the unit Abel rose up through, would become its next chief financial officer later this year.

One of Buffett’s investment deputies, Todd Combs, departed for JPMorgan Chase as part of the reshuffle. Abel noted that the stock portfolio Combs had built was now being partially overseen by the company’s investment manager Ted Weschler.

“At Berkshire, equity investments are fundamental to our capital allocation activities; responsibility ultimately resides with me as CEO,” he wrote.

The letter struck a less folksy tone than Buffett often did. Abel’s writing was straightforward, occasionally straying into corporate jargon, including when he detailed the push to improve railroad operator BNSF’s operating margins.

He continued Buffett’s tradition of using the letter to highlight mistakes and areas in which the dozens of businesses owned by Berkshire needed to improve. He also detailed the cash generation of many of the company’s subsidiaries, which touch vast parts of the US economy and financial system. Investors have in the past complained about the limited disclosure Berkshire provides on these units.


Macrae Sykes, a portfolio manager at Gabelli, which is invested in Berkshire, said the letter “showed humility, expressed clarity in communication and confidence in his role”.

“Technically a gold medal for annual letter review of corporate businesses,” Sykes said, noting Abel touched on all of Berkshire’s core businesses. “Shareholders should be convinced he has a comprehensive understanding” of the business, he said.

The letter accompanied fourth-quarter results that showed Berkshire’s operating earnings had weakened, falling 30 per cent from the year before to $10.2bn, as its insurance division’s profits slumped.

Net income fell 2.5 per cent from the year earlier to $19.2bn. For the full year, net profits were down 25 per cent to $67bn.

Echoing Buffett’s past remarks, Abel cautioned investors not to draw conclusions from the net figures, which are impacted by the rise and fall in value of its $298bn stock portfolio.

The results were hit by writedowns of Berkshire’s stakes in oil and gas major Occidental Petroleum and packaged foods giant Kraft Heinz, which knocked $8.3bn off full-year profits.

Abel characterised the investment in Kraft as a “disappointment”, adding “our return has been well short of adequate”. Berkshire is considering exiting its stake in the foods group, which it played a key role in creating.

He said the overall results “underscored the durability of our operating businesses, while also reflecting the fact that we have opportunities for further improvement”.

He noted that Berkshire’s insurance businesses were experiencing intensifying competition as capital poured into the industry from private investment groups, which had weighed on pricing. Berkshire has traditionally cut back its underwriting activity when the insurance premiums it can earn are not attractive, a stance Abel said remained a core principle.

Berkshire also continued to sell off part of its equity portfolio, which includes multibillion-dollar stakes in companies like Apple and American Express. The company trimmed the portfolio by $3bn in the final three months of last year, taking its stock sales since it began disposing of positions in 2022 to $187bn.

Abel does not plan to provide quarterly earnings commentary, which Buffett has long eschewed. But he said he was keen for shareholders to get “to know, over time, more of the Berkshire team”.

He said he would be joined on stage at the company’s annual meeting in May by several top executives, including Ajit Jain, who runs Berkshire’s insurance operations, BNSF chief executive Katie Farmer and Adam Johnson, who was recently elevated to oversee the company’s consumer products, services and retailing units.

“Warren is obviously a very hard act to follow,” he wrote.

WSJ : Berkshire’s Abel Pledges to Follow Buffett’s ‘Framework’

Berkshire’s Abel Pledges to Follow Buffett’s ‘Framework’
The December quarter marked Warren Buffett’s last as Berkshire CEO, a role now occupied by his longtime deputy

  • Greg Abel, Berkshire Hathaway’s new chief executive, outlined a vision in his first letter to shareholders that embraces Warren Buffett’s strategy.
  • Berkshire Hathaway reported a 2.5% drop in quarterly profit and a 30% decline in operating earnings.
  • The company ended 2025 with a record $373.1 billion in cash and Treasury bills, a 4% increase from three months earlier.

Berkshire Hathaway’s BRK.B 0.45%increase; green up pointing triangle new chief executive laid out a vision for the conglomerate that signaled he would stick with what worked for his predecessor, Warren Buffett.

“Berkshire’s culture and values form the basis of our operating framework, which shapes the strategy we pursue and the choices we make as we build Berkshire,” Greg Abel wrote in his first letter to shareholders. “As CEO, the framework governs how I lead every day.”

Abel reiterated the many virtues that made the company unusual, and unusually successful, during Buffett’s long run: a decentralized model that gives its business managers autonomy, a vast stock portfolio overseen by the CEO, a reliably profitable insurance empire and a reluctance to buy back Berkshire shares or offer a cash dividend.

“Berkshire is a unique conglomerate, intentionally designed to allocate capital rationally and efficiently,” Abel wrote. “We are committed to strengthening the great legacy built by Warren Buffett and his business partner Charlie Munger, ensuring it endures through our commitment to excellence.”


Abel also confirmed to shareholders that Buffett is still involved in Berkshire’s operations, writing that the Oracle of Omaha is in the office five days a week and available to consult on matters from underwriting insurance to dealmaking. But Abel also made clear that he was now fully serving as Berkshire’s top executive, overseeing not only the company’s many businesses but also its stock portfolio.

“At Berkshire, equity investments are fundamental to our capital allocation activities; responsibility ultimately resides with me as CEO,” wrote Abel.

Abel said that investment manager Ted Weschler is responsible for about 6% of Berkshire’s portfolio, including a portion that was overseen by Todd Combs, another investment manager, who recently decamped to JPMorgan Chase.

Macrae Sykes, portfolio manager at Gabelli Funds, said he was pleased that Abel reiterated that he will stick to the tenets of Berkshire’s investing philosophy. And Abel’s writing style, while lacking Buffett’s trademark wit and humor, was enjoyable, he said.

“I was pleasantly surprised,” said Sykes.

Berkshire reported a 2.5% drop in quarterly profit after the company earned less from its insurance operations.

Net income fell to $19.2 billion, or $13,349 per Class A share equivalent, from $19.69 billion, or $13,695 per Class A share, in the year-earlier period.

Berkshire ended 2025 with a record $373.1 billion in cash and Treasury bills after accounting for a payable for purchasing some of the short-term government debt, a 4% increase from three months earlier. The company refrained from repurchasing any of its own shares during the quarter, marking the sixth-straight period in which it didn’t buy back any stock.

“Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing. It does not,” Abel wrote.

Buffett, 95 years old, unveiled plans in May to hand off his role as Berkshire’s longtime CEO to Abel at year-end. The company synonymous with Buffett’s corporate stewardship and savvy investing stepped into a new era in January with Abel’s ascendance.

“Warren,” Abel wrote in the letter, “is obviously a very hard act to follow.”

In laying out the agenda for this year’s annual meeting, Abel confirmed one notable change: Buffett won’t be on stage. The first of two question-and-answer sessions with investors will feature Abel and Ajit Jain, the head of Berkshire’s insurance powerhouse. The second will feature BNSF CEO Katie Farmer and Adam Johnson, Berkshire’s newly appointed president of consumer products, service and retailing businesses.

Operating earnings, which exclude some investment results, fell 30% to $10.2 billion from $14.53 billion. Profits from insurance underwriting and investment income declined, while Berkshire reported higher earnings from its BNSF railroad operations and its manufacturing, service and retailing businesses.

Buffett has said that operating earnings are the better measure of the company’s performance. Accounting rules require Berkshire to include unrealized gains and losses from its giant investment portfolio when it reports net income, meaning that short-term fluctuations in the stock market can cause big swings in quarterly income.

Berkshire’s Class A shares reached a record high of $809,350 on May 2, right before Buffett announced he was stepping down as CEO. The shares have since dropped 6.5%, closing Friday at $757,000. In that same period, the S&P 500 index rose 21%.

For the year, Berkshire was a net seller of stocks.

WSJ : The Big Bet on European Defense Stocks Is Getting Expensive

The Big Bet on European Defense Stocks Is Getting Expensive
More money for military spending likely will mean more political interference and bad news for margins

Forget AI. The big trade last year was to buy the idea that Europe has finally woken up to the need to spend big to defend itself.

But, after the best year ever for German defense stocks, investors now face the question of whether the trade is already over.

For those who haven’t been paying attention, start with the case for investing in defense. Fracturing geopolitics and concern about U.S. defense guarantees have combined with Russia’s assault on Ukraine to push European politicians, led by Germany, to commit to massive increases in military spending. The nationalistic shift and threats to supply chains have persuaded Europe to break with its traditional willingness to rely on foreign military suppliers, too.


And not just Europe. “There’s been a fundamental shift in priorities away from economic efficiency and globalization towards national security and resilience,” says Thomas Mucha, geopolitical strategist at Wellington Management.

Given all the extra money likely to come into defense companies, how could their stock prices not beat the market?

There are two risks: price and politics, where a lesson from the fall of the Berlin Wall should induce caution. Prices have soared, so a positive outlook for defense spending is already reflected in the jump in stocks.

Sure, Germany’s spending has risen from just over 1% of gross domestic product a decade ago to more than 2% last year, with plans to rise to 3.5% before 2030. But German defense stocks—dominated by the tank maker Rheinmetall—more than tripled in the first nine months of last year, before easing a little.

Profits will rise a lot, but they need to. The German sector trades at 38 times forecast earnings, up from 20 times at the start of last year and far above the 15 times of the German market as a whole.

The politics argument is that as governments spend a lot more on defense, they will want to control how much of that leaks out again in the form of profits for shareholders. That’s especially the case when companies are likely to be much more reliant on domestic sales than in the recent past.

“We’re talking about large public spending which will most likely be under scrutiny,” says Vincent Mortier, chief investment officer at Amundi. “The bigger they grow, the more there will be” political pressure on margins, he says.

Here we come to the lesson from the fall of the Berlin Wall. U.S. weapons manufacturers actually performed better in the years since the end of the Cold War than during it. That’s despite U.S. military spending plummeting from around 7% of the economy in 1988 to about 3.7% today, as politicians spent the peace dividend elsewhere.


From just before the Wall fell to now, the “guns” sector had the third-best total return out of 49 U.S. sectors defined by Kenneth French, a Dartmouth finance professor. It came in behind software and microchips. Aerospace, where major defense stocks including Boeing sit, also did well, coming in sixth.

But from 1963 to 1988 the double splurge in spending for Vietnam and the Cold War did little to help military stocks. They came in 25th. At the top were the sectors that might be more associated with a peace dividend: tobacco (“smoke” in Prof. French’s definition), “fun,” “meals” and “soda.”

This counterintuitive ranking wasn’t because the period included the Swinging Sixties. It’s politics. For all the left-wing concern at the time about the military-industrial complex, profit margins were much lower in the 1980s than since 2010. They hit their highest in 2022, in data going back to the early 1980s.


Some of the post-1989 margin improvement is because companies were allowed to merge, although that has been true of other sectors. Some of it is because corporate taxes came down. But I would argue a lot is because companies increasingly sell to foreign customers that have less ability to extract lower prices by pointing to fat profits. Smaller domestic military budgets also reduce the need for companies to kowtow to politicians by maintaining unprofitable operations in their districts or supporting civilian projects.

Investors betting on how much of the peace dividend will return as spending on defense should also focus on how much of it will be allowed to flow through to shareholders of arms manufacturers, especially in Europe. Guns might be less lucrative than you think.

>>> Barron's WeekEnd Summary

Cover:
-AI is transforming financial markets by enabling certain utilities to benefit from tech giants investing in power for AI data centers. These data centers require enormous electricity, and utilities are negotiating deals that obligate tech companies to cover their energy costs, even amidst political pressure and consumer backlash. President Trump emphasized that major tech firms must provide for their power needs to prevent increased electricity prices for consumers. As a result, utilities expect consumers to save around $100 annually, while they secure long-term revenue. However, the existing electrical grid is at risk of overload, with projections of potential shortages for data-center developments by 2028.

Interview:
-Jim Paulsen, though self-described as a "retired Grampa," continues to engage deeply with economic analysis through his Substack newsletter, Paulsen Perspectives, which he initiated in February 2024 after retiring from a 40-year career as a chief investment strategist, primarily at Wells Fargo and the Leuthold Group. Now free from corporate constraints, he enjoys exploring the emotional and mathematical aspects of trading, contributing to his appeal as a writer for nearly 7,500 subscribers with regular posts on topics such as bond yields, consumer confidence, and sector rotation. In a mid-February conversation with Barron’s, Paulsen expressed a bullish outlook on the markets despite a recent downturn in tech stocks and artificial intelligence, citing the current low levels of confidence among consumers and private sector leaders as historically favorable indicators for investment. He acknowledges a persistent worry about potential downturns, particularly concerning the year 2026, yet maintains that the prevailing pessimism presents a compelling case for being invested.

Tech Trader:
-Nvidia's recent fiscal fourth-quarter earnings received praise from analysts, highlighting "generational growth at inspirational valuation." Despite strong results and a booming AI data-center buildout, Nvidia's stock fell 5.5%, trapped in a sideways movement since October. Concerns include growth deceleration, with sales growth having peaked at 265%, and increasing competition from companies like Meta and major cloud providers developing their own chips. Nvidia's substantial $95 billion inventory commitment raises risks, and limitations in the data-center boom may impact hyperscalers’ capital expenditures. Additionally, Nvidia's investments in the AI start-up ecosystem, while substantial, may not significantly impact its overall sales of $216 billion in fiscal 2026 or the projected $350 billion this year.

The Trader:
-Financial stocks are facing challenges due to concerns over private credit, heightened inflation as indicated by January's producer price index, potential U.S. military actions against Iran, and increased import tariffs. A significant focus is on corporate earnings, particularly profit margins. Nvidia's earnings call did not show signs of slowing data-center growth, but its gross margin guidance slightly exceeded estimates. Moreover, the aggregate gross margins for S&P 500 companies, excluding financial and real estate sectors, have decreased to about 45%, down from over 47% in 2021. This decline is critical as gross margins are indicative of a company's future earnings potential; lower margins often imply reduced profitability per product or service and may signal decreasing demand and growth, despite net margins potentially appearing stable due to cost-cutting strategies.
-The S&P 500 has a new dividend yield leader, Conagra Brands, with a yield of 7.6%, following LyondellBasell Industries’ recent dividend cut. This title is a double-edged sword, attracting income-seeking investors while raising questions about the sustainability of such a high yield. Conagra faces challenges, including competition from cheaper generics and a projected sales decline of 3.1% for the fiscal year ending in May, with a further 1% drop expected the following year. Nonetheless, the company shows promise with growth prospects in the high-protein frozen foods segment. Conagra's shares have increased by 8.6% in 2026, benefiting from a market shift toward staples and real-economy stocks.

Features:
-The recent bidding war for Warner Bros. Discovery highlighted key dynamics in the media landscape, notably benefiting Netflix, which chose to withdraw from the acquisition after Paramount Skydance made a higher offer. Paramount's winning bid of $31/share in cash values Warner Bros. at $81B plus approximately $29B in assumed net debt, raising concerns that it may be a costly victory. Following Netflix's decision, its shares surged by 22% to $96, as investors welcomed the news that the company would avoid absorbing over $50B in new debt that could have disrupted its growth narrative. Analysts predict further potential gains for Netflix, which previously traded at $103 before the bid was announced, especially considering the significant $2.8B breakup fee it will receive.
-On December 16, an anonymous account on Polymarket placed a $68,000 bet on Kevin Hassett being nominated as the next Federal Reserve chair, sparking speculation about insider knowledge. Stand CEO Edward Ridgely noted that insiders sometimes influence prediction markets, citing a notable bet on Taylor Swift's engagement prior to its announcement. Although Hassett was ultimately not nominated, Polymarket's social media has highlighted numerous potential insider transactions, with about half resulting in payouts. Polymarket’s CEO, Shayne Coplan, acknowledged the benefits of insider transactions while addressing ethical concerns. As scrutiny grows over dubious trades, a recent example involved a $30,000 bet on Venezuelan President Maduro's ouster before his capture, leading to proposed legislation against federal workers participating in prediction markets.

Europe:
-Novo Nordisk is reducing the prices of Ozempic and Wegovy in the U.S. by 34% and 50%, respectively, to a new monthly price of $675, effective January 1, 2027. This move comes as Novo faces a 56% decline in its stock over the past year and a further drop of 2.5% following the announcement, after a previous 16% decrease. The price cuts also apply to Rybelsus and are unprecedented in the U.S. market, as Novo competes with Eli Lilly for weight-loss market share. Additionally, the company shared that its experimental drug, UBT251, has shown promising results in a Phase 2 trial in China, with an average weight loss of 19.7% after 24 weeks, alongside improvements in waist circumference, blood glucose, blood pressure, and lipid levels compared to a placebo.

Emerging Markets:
-No update

Commodities:
-The rare-earth industry remains dynamic, highlighted by MP Materials' recent quarterly report that showcased better-than-expected earnings yet led to a slight decline in stock value. The company reported EBITDA of $39.2M on sales of approximately $53M, surpassing Wall Street's forecasts of $34M EBITDA and $60M in sales. The drop in share price to $58.87 came despite the positive profit margins, attributed to the implementation of a price protection agreement with the Department of Defense, which safeguards a price of $110/Kg. for key rare-earth products, although these payments are not counted as revenue. MP's strategy involves transitioning from selling intermediate products to higher-value rare-earth materials, evidenced by its sales figures of rare-earth oxides and neodymium-praseodymium (NdPr) alloys. The report noted a rise in NdPr prices, which are now above the $110 threshold, signaling a potential shift in pricing dynamics influenced by increased demand from various sectors. Canaccord analyst George Gianarikas maintained a 'Buy' rating on MP stock, reflecting confidence in the company's performance and future growth, assigning a price target of $60. Despite fluctuations in stock and market responses, the company is seen as making significant progress in a crucial sector.

Streetwise:
-Artificial intelligence is predicted to make many white-collar jobs obsolete, potentially causing mass layoffs, reduced spending, defaults, a stock market crash, a mortgage crisis, and decreasing housing values. This scenario, presented by Citrini Research as a theoretical retrospective from 2028, sparked temporary investor panic. Despite the concerns, Keith Lerner from Truist Wealth advises stock buyers to focus on long-term investment rather than worst-case scenarios. The current market poses challenges in identifying investment opportunities, particularly as AI stocks decline. A screening of the S&P 500 for stocks with recent "Buy" upgrades revealed potential buys, often viewed favorably if they lack ties to AI narratives.