TheChek News Flow

WSJ : Hedge Funds Call This Psychologist When Their Traders Start Losing

Hedge Funds Call This Psychologist When Their Traders Start Losing

Dave Popple is tasked with finding who can cut it for hypercompetitive multimanager funds

Dave Popple, a psychologist, assesses senior recruits for top trading firms and helps existing traders improve performance and manage anxiety.
Traders in “pod shops” are often judged weekly or daily; a 5% loss can reduce managed cash, and sustained poor performance may lead to firing.
Popple helps traders separate trading values from self-worth, using techniques like asking them to advise a hypothetical subordinate dealing with losses.

The biggest hedge funds fuel competition—against one another, but also inside their own shops.

That’s why they also employ people like Dave Popple.

Popple, a 59-year-old psychologist, is hired by top trading firms to assess senior recruits and weed out those unlikely to thrive in these pressure-cooker environments. He also helps existing traders improve their performance and address their anxieties—a way to improve employee retention and results.

He focuses on “multimanager” hedge funds—also known as “pod shops”—sprawling enterprises made up of semiautonomous trading teams that have come to dominate Wall Street.

They are the biggest funds, names like Citadel, Millennium and Point72, and their short-term nature creates unique burdens even in the hyper-stress world of trading.

Inside these pod shops, traders—usually 35 to 45 years old—are tasked with predicting short-term moves in various investments. Many are judged on a weekly, or even daily, basis and losses are barely tolerated. Just a 5% loss can lead to a reduction in the cash they manage, while several months of poor performance can result in a firing.

Stocks have been climbing but worries of an artificial-intelligence bubble, President Trump’s next moves, and other concerns leave traders as anxious as ever.

When performance starts to slip, traders sometimes start to spiral.

“They have dark circles under their eyes,” he says, a sign that stress is building. “They internalize failure.”

One trader wouldn’t allow himself to eat sushi—his favorite food—as punishment for three days of losses.

“He didn’t think he deserved it,” Popple says.

Popple is tasked with getting them back on track. He tells clients that they need to separate trading performance from their view of their self-worth.

One strategy is asking what advice they would give a hypothetical subordinate dealing with losses. Usually, Popple says, the traders realize that setbacks reflect market moves, not a trader’s skill. The doctor’s follow-up: “Why aren’t you applying those standards to yourself?”

“That’s the ‘Aha’ moment,” he says. “It ends up being more therapy than coaching.”

Portfolio-manager coaching and psychology isn’t a new field. Years ago, hedge-fund managers, including Julian Robertson and Steve Cohen, hired in-house therapists, including Dr. Aaron Stern, an expert in narcissistic personality disorder. He is seen as a model for Wendy Rhoades, the character in the Showtime series “Billions.”

In the past, some funds administered Rorschach tests, asking prospective recruits to assess ink blots, aiming to measure their ability to manage complexity. The test took over an hour, though, and some traders lost patience along the way.

The rise of pod shops has created new demand.

Portfolio managers at these firms usually lead small teams of several subordinates. That builds camaraderie among team members but leaves these traders alienated and in vicious competition with others, even those at their own firms.

“They definitely don’t talk to a supervisor if something is going wrong,” Popple says, since they are worried about being compared with better-performing colleagues.

Popple grew up in Eau Claire, a midsize city in Wisconsin. After college, he worked with a youth minister. He earned his Ph.D. and then focused on victims of trauma, including war veterans, child-abuse survivors and men abused by priests as children.

“I really thought I should be saving the world,” he says.

When a friend asked for help addressing discord among staffers at a telecom company, Popple decided it might be enjoyable working with businesspeople. At the age of 40, he shifted to working with stressed-out traders and determining who can make it inside Wall Street’s pods.

Popple says he and others often detect those who aren’t cut out for these jobs, though they sometimes get it wrong.

Rivals sometimes embrace unorthodox approaches, Popple says, conducting hourslong interview sessions that can include questions aimed at unnerving candidates—What was your kindergarten report card like? How old were you when you stopped wetting your bed?

Popple tries to detect how candidates will handle market volatility, asking how long they tend to dwell on big losses. He wants to find out if they are only in it for the money, which he doesn’t think leads to a top performer.

He tries to measure “lateral thinking and processing speed,” he says, traits that can lead to strong gains.

Over the years, Popple has learned a lot about top hedge-fund traders. The best investors are hyper-disciplined—one client persuaded his gym to share keys to its facility, so he could work out at 3 a.m. before a business trip.

This discipline can help them maintain an investing approach amid turbulent markets.

“They are the rare overlap of leaky attention, which allows them to pick up signals others miss, and strong discipline and willpower,” Popple says.

Top clients often don’t have enormous egos and battle deep insecurities—reflective of the fact that the best investor gets it wrong nearly 50% of the time.

They are super-competitive but it isn’t about acquiring material possessions, he has found.

“That was counterintuitive,” Popple says. “It’s all about the score and winning—they want to accomplish more and more and more.”

Top traders are generally no happier than the general populace, he says, citing data from various studies. But they can be ahead of others at realizing that deep satisfaction comes from building a closeness with spouses and children.

“They prioritize their relationships at levels not seen in other industries,” he says.

FT : Renault and Nissan in talks over reviving alliance after leadership changes

Renault and Nissan in talks over reviving alliance after leadership changes

New possibilities open up after exit of CEO Luca de Meo, who wanted to offload French group’s stake in the Japanese carmaker

Renault and Nissan are discussing reigniting their 26-year alliance as recent leadership changes at both companies and a financial crisis at the Japanese group have triggered a fresh review of their often tumultuous partnership.

Former Renault CEO Luca de Meo had favoured selling down the French group’s stake in Nissan after the relationship soured following the arrest of the Japanese group’s former chair Carlos Ghosn in 2018, according to people familiar with the discussions. But de Meo’s departure has led to talks over reviving the alliance agreement, the people said.

The talks are the latest chapter in a volatile partnership following a restructuring of the alliance in 2023 under which Renault agreed to gradually reduce its holding in Nissan, once as high as 43 per cent, to 10 per cent.

De Meo had wanted to reinvest Renault’s proceeds from its Nissan stake sale to drive the French carmaker’s own growth, said the people. The French group holds almost 36 per cent in Nissan, including an 18.7 per cent stake in a French trust it wants to offload. Its voting rights are limited to 15 per cent.

The sale had been complicated by Nissan’s sinking share price and the strong premium sought by De Meo to sell the shares. Renault was forced to write off €9.5bn of its stake in Nissan earlier this year.

Nissan’s share price has plummeted 25 per cent over the past year as it undergoes drastic restructuring involving multiple plant shutdowns and 20,000 job cuts.

De Meo’s exit to run French luxury group Kering has changed the calculus, opening the door for new CEO François Provost to re-evaluate the alliance and its benefits, people familiar with the company said.

At an event in Paris this month, Provost said that partnerships were a key remedy to Renault’s small scale compared with other European carmakers such as Peugeot and Fiat owner Stellantis or Mercedes-Benz.

“Twenty years with Nissan have taught us . . . that we have the ability not only to negotiate partnerships but above all to execute them to Renault’s advantage. That’s how we address the topic of scale,” he said.

A Renault spokesperson said that Provost and Nissan’s new chief executive Ivan Espinosa were in regular discussions about how each company could support each other, saying this was a “good sign” for the future of the relationship.

In his previous role, Provost was in charge of Renault’s partnerships with other groups and the company this month announced an expansion of its co-operation with Chinese carmaker Geely in Brazil.

“De Meo’s departure opened up a new possibility for the alliance . . . The new CEO is much more in favour of doing something with the alliance,” said one person with knowledge of the matter. “He is a partnership man”, added another person.

Earlier this year, Renault announced plans to acquire full control of its joint venture in India with Nissan which helped its Japanese partner raise capital while strengthening the French group’s foothold in a key market. Nissan will continue to produce at the plant.

Meanwhile, the Japanese group is building its own version of Renault’s all-electric Twingo using the French company’s platform at its Douai plant in northern France. The two groups also have an alliance with smaller rival Mitsubishi Motors.

Another person with knowledge of the discussions said more projects between Nissan and Renault will be announced. With Nissan’s performance under pressure, the company is also looking for more opportunities to jointly manufacture its vehicles with various partners.

“The alliance is a key pillar of our business,” Nissan said, adding that the two groups were working on “several high-value strategic projects”.

FT : Vinted explores share sale at €8bn valuation

Vinted explores share sale at €8bn valuation

Deal would highlight second-hand fashion start-up’s rapid expansion and provide an exit for some early investors

Vinted is discussing a share sale that could value the European second-hand fashion start-up at roughly €8bn in a deal that would underscore the platform’s expansion while allowing some early investors to cash out.

The fast-growing company is in preliminary discussions about selling existing shares in a transaction that could be worth several hundred million euros, according to people familiar with the matter.

Any process would be likely to kick off early next year, they added, while cautioning that talks were still at an early stage and no valuation or size had yet been set.

Lithuania-based Vinted last brought in new investors about a year ago at a €5bn valuation in a deal led by US investment group TPG that also included asset manager Baillie Gifford.

Chief executive Thomas Plantenga said on Friday that revenues were set to rise about 40 per cent to more than €1bn this year, from €813mn in 2024, off sales of items on its platform with a gross merchandise value of €10bn. Net profits roughly quadrupled last year to €76.7mn.

Founded in 2008 as a way for locals to swap clothes, Vinted in 2019 became Lithuania’s first $1bn technology start-up. Its previous backers include Accel, Insight Partners, EQT, Lightspeed and Sprints.

The company is now pushing beyond clothing into categories such as electronics, books, toys and video games as it seeks to capture more of the booming market for used goods. Vinted is also focusing on efficient shipping and payments.

“In the end, our vision is to make second-hand first choice . . . globally, and [for] any type of product you can imagine,” Plantenga told the Financial Times last year. “In the long term, we would try to go to other categories.”

At the time, he also hinted that the group could soon look at expanding into the US after having established itself in most European countries.

The company said on Friday it had started its first test to crack the US market by establishing a connection between London and New York that allows buyers and sellers in each location to trade with each other.

“The US market is very immature,” Plantenga told Bloomberg TV. “All the players that are there are struggling and the penetration levels of second-hand are very low. So for us, that’s a huge opportunity.”

Vinted could eventually pursue an initial public offering, Plantenga has said previously, although it does not have a set timetable.

Vinted declined to comment.

FT : A new spectre looms over democracy: prediction markets

A new spectre looms over democracy: prediction markets

They offer a troubling opportunity to manipulate public perceptions of the outcome of political events

Any New Yorker wanting a steer on how things might have panned out in the city’s recent mayoral election could have done so without so much as glancing at a newspaper, turning on the TV or scrolling through social media. All they had to do was to look upwards — at one of several giant digital billboards that had suddenly popped up all over the city centre, featuring some pretty attention-grabbing numbers.

“94% MAMDANI 6% CUOMO”, the billboards screamed, along with the phrase “OKAY Trade” and then a company name: Polymarket.

What was this? Was it some kind of an advert for the Democratic candidate (and eventual winner) Zohran Mamdani, or for a company called Polymarket? Did it reflect polling numbers, betting odds or something else? Were they numbers to be trusted?

What these billboards in fact showed was the implied probability of a Mamdani win, based on the price that traders — some might call them gamblers, it’s a blurred line — were paying for a binary option on one of the biggest prediction markets platforms, Polymarket. According to the way in which these markets function, if Mamdani won, a wager of 94 cents would pay out $1; if he lost, nothing.

Mamdani himself might have been quite pleased with the free publicity but these were adverts for Polymarket. And they were not the only such site advertising themselves in this way: rival site Kalshi had also been plastering live prices for prediction contracts on both the Democratic candidate and independent rival Andrew Cuomo across digital billboards in the run-up to the election.

Prediction markets are booming, with political contests playing the main role in their explosion (though sports events are rapidly gaining in popularity, too). Trading volumes on both Polymarket — which is currently in talks to raise money at a valuation of $12 to $15bn — and Kalshi hit record highs in the run-up to the New York election, recording volumes of over $3bn and over $4bn respectively in October. Last week, Google announced that it would be integrating data from the sites into its search results, “so you can ask questions about future market events and harness the wisdom of the crowds”.

And if such faith in the wisdom of financially motivated, largely young and male crowds doesn’t make you raise an eyebrow, perhaps hearing about the newest major player in the market will. Last month, Truth Social, the social media platform majority-owned by Donald Trump and his family, announced the launch of Truth Predict, a new prediction market platform, in affiliation with crypto exchange Crypto.com. Donald Trump Jr, meanwhile, is not only on the board of Truth Social’s parent company, he is also an investor in Polymarket, a member of its advisory board — and a “strategic adviser” to Kalshi.

But such conflicts of interest are not the only thing to consider. What about the possible use of prediction markets to influence the outcomes of elections? To encourage or discourage certain politicians from entering the race or delegitimise election results that have gone in a way not predicted? And who is to stop foreign actors from getting involved?

Last year, more than $3.6bn was staked on the presidential race on Polymarket, despite the fact that US users were not officially allowed to use the platform at the time. They may have circumvented this using VPNs, but users elsewhere also took a keen interest — four non-American accounts from outside the US together placed more than $30mn in wagers on Trump winning, creating a decisive swing in his favour on the platform in the weeks before the election.

The research on whether voters are more or less likely to vote for a candidate they believe will win is mixed: some studies suggest it could discourage voters from going to the ballot box by making them complacent, while others have found a “bandwagon effect” that creates more support for a candidate who appears popular.

Either way, the opportunity these platforms afford to manipulate the perception of the outcome of political events is troubling, particularly at a time in which trust in institutions — including polling companies — is low and it can no longer be assumed that the legitimate election results will be accepted. How much worse might the backlash from Trump’s supporters have been after the 2020 presidential election if billboards reading “94% TRUMP 6% BIDEN” had been erected all over the US?

Prediction markets, like regular betting odds, might provide a useful gauge on how events may turn out. But wariness about their findings — and about the wisdom and benevolence of the particular crowds they attract — is needed.

>>> Barron’s weekend Summary

Cover:

-As Warren Buffett steps down as CEO of Berkshire Hathaway, investors are encouraged to welcome this change. Buffett, who has led the company for 60 years, will hand over the reins to Greg Abel, his chosen successor, while remaining chairman to provide guidance. The timing of this transition is strategic, as Buffett's recent performance has declined, with Berkshire lagging behind the S&P 500. Abel, a seasoned executive, must adapt the company's strategy by potentially implementing dividends, quarterly earnings calls, and aligning investments to better suit Berkshire's future as a "normal" company. This shift marks a significant turning point in Berkshire's business approach.

Interview:

-Avery Marquez, director of investment strategies at Renaissance, has been monitoring the fluctuations of the IPO market since joining the firm in 2019. Following a volatile period due to President Trump's tariff announcement and a federal government shutdown, the IPO market experienced pauses in 2025. Marquez, under the guidance of Renaissance's co-founder Kathleen Smith, collaborates with the firm’s executives and research team to analyze upcoming public offerings. Renaissance operates two ETFs, Renaissance IPO and Renaissance International IPO, which focus on companies that went public within the last three years and adjust their holdings quarterly. In a recent discussion, Marquez shared insights on the potential for IPOs in 2026, notable upcoming deals, and optimal timings for investing in newly issued stocks.

Tech Trader:

-The AI investment market is seeing increased volatility amid concerns of an investment bubble, as shareholders react to minor events. Michael Burry, known for shorting during the financial crisis, sparked worries with his commentary on Big Tech’s accounting practices. Burry's claims suggest that companies like Nvidia and Palantir are manipulating depreciation expenses, which he estimates could amount to $176B from 2026 to 2028. However, the argument overlooks the nature of asset depreciation as governed by GAAP accounting, where costs are spread over an asset's useful life. The shift in depreciation schedules from four to six years significantly lowers annual expenses, indicating that Burry's claims about inflated profits may not accurately reflect the financial practices involved in capital expenditures for AI infrastructure.

The Trader:

-On Holding stock has struggled this year but may rise in the coming months. Despite challenges from tariffs affecting the sneaker industry, On has shown resilience, recently reporting better-than-expected earnings and lifting its annual guidance. Shares jumped 18% following the quarterly release, although they remain down 24% year-to-date. Analysts view this weakness as a potential buying opportunity, with Morgan Stanley's Alex Straton highlighting On as a leading growth and margin expansion story for 2026, maintaining an Overweight rating with a $70 price target.

-Palantir Technologies has seen a 143% increase in its stock in 2025, reaching a market cap of over $450B billion, and is the top holding in the Global X Defense Tech ETF, which has risen 78% this year. BigBear.ai Holdings offers a more volatile alternative to Palantir, with its shares experiencing a 28% rise this year and a remarkable 214% increase over the past year, attributable to government contracts and AI advancements. BigBear has recently announced a $250 million acquisition of Ask Sage, enhancing its defense capabilities. Following this news, BigBear's stock rose by 6.1% and an additional 13% the next day. CEO Kevin McAleenan remains optimistic about future business prospects in border security and defense, despite temporary setbacks from the government shutdown.

Features:

-Over the past century, American workplaces have become safer, featuring improvements such as cleaner environments, reduced fire hazards, and safety equipment like goggles and steel-toed boots. Currently, the focus is shifting to creating pleasant and comfortable workplaces that entice employees back after prolonged periods of remote work during the pandemic. Rachel Hodgdon, president of the International WELL Building Institute, emphasizes the need for companies to attract staff back rather than merely enforcing return-to-office mandates. Examples like Excel Dryer highlight this trend, where the company implements upgrades like indoor air filtration, green walls, and adaptive lighting to enhance employee satisfaction. Architect Rick Cook notes that features such as air quality and access to outdoor spaces gained prominence during the pandemic and continue to influence workplace design, as companies seek to encourage employees to return to physical office spaces.

-Nearly one-third of low-income households live paycheck to paycheck, contrasting with more stable financial situations among middle- and high-income earners. This disparity is attributed to slow wage growth for lower-income groups, where inflation has outpaced wage increases. The Bank of America Institute's report highlights stress among low-income consumers despite healthy credit measures across banks. Citations from bank executives emphasize a "K-shaped economy," indicating strong performance on the high end and emerging difficulties at the lower end, particularly for consumers with weaker credit scores. As consumer spending represents about 70% of U.S. GDP, banks are closely monitoring these trends for potential economic slowdown signs.

Europe:

-Germany-based defense company Rheinmetall has experienced a significant stock increase, with a market cap of approximately EUR 78B billion euros ($90B). Investors are optimistic about further stock rallies in the coming year, as Germany is pivotal to Europe’s rearmament efforts. Despite being Europe’s largest economy, Germany did not meet its NATO spending commitment of at least 2% of GDP from 1992 to 2023. The increase in military spending in Europe, estimated at €800 billion from 2025 to 2028 following the 2022 Russian invasion of Ukraine, is driving up Rheinmetall's stock prices. As of November 11, the stock has risen 183% in 2023 and is projected to reach a fair value of €2,220, a 27% increase. Demand for ammunition globally remains high, as stated by industry experts, indicating a consistent need for Rheinmetall’s production of munitions.

Emerging Markets:

-No Update

Commodities:

-Rare-earth stocks have faced significant downturns recently, despite substantial gains driven by the U.S. aim to reduce reliance on Chinese minerals. MP Materials, the largest rare-earth producer in the Western Hemisphere, has seen its shares drop 42% in the past month, although they have risen by 269% this year. This fluctuation has been closely tied to China's threats of export restrictions, which caused a spike in stock prices earlier in October. However, easing trade tensions led to a decline in these fears. The US Defense Department's agreement with MP, which includes an equity stake and price guarantees, has drastically changed the domestic rare-earth landscape, enhancing estimates for MP's earnings before interest, taxes, depreciation, and amortization (Ebitda) from below $200M to nearly $1B by the end of the decade. Analysts are optimistic about MP's future, reflected in J.P. Morgan's upgrade of MP stock to "Buy" from "Hold," albeit with a lowered price target of $74. This upgrade acknowledges the national security importance of rare-earth supply chains, reinforced by the Pentagon's investment in MP.

Streetwise:

-Robinhood Markets has introduced prediction markets, allowing clients to bet on events such as the existence of aliens for a small fee. This novel service has been described as "event trading" and is seen as a significant growth area for the company. Despite initial skepticism regarding its appropriateness and risk, the predictions hub, developed in partnership with Kalshi, has gained popularity, particularly in sports. Robinhood has transitioned from a struggling IPO to a top performer in the S&P 500, bolstered by the rise of stock and crypto trading. As trading volume reaches new highs, questions remain about regulatory oversight and the company's direction in a changing market.

(ZeroHedge) US Utility Giants Discuss Soaring Power Bills, Grid Reforms In The

US Utility Giants Discuss Soaring Power Bills, Grid Reforms In The Data-Center Era

Readers were given an epic breakdown on Wednesday detailing the true scale of funding needed for the AI data-center boom, one that would require an estimated $5 trillion in investment, with Washington on the hook for at least $1 trillion of it. In a separate note, we highlighted an inconvenient truth for this cycle: the U.S. is short 44 nuclear power plants.

Power is the obvious bottleneck that could derail the entire AI boom cycle. We now turn to Goldman analysts led by Carly Davenport for deeper insight into what electric companies are saying about the grid's current structure, data center demand, load growth, the power-bill crisis, and other critical topics discussed at the EEI Financial Conference in Hollywood, Florida, earlier this week.

Davenport told clients that sentiment across the utilities sector was broadly constructive, driven by optimism about accelerating load growth, expanding capital spending plans, and a stronger earnings outlook heading into 2026. She noted investors are increasingly focused on identifying which utilities have downside protection tied to data-center growth and which are proactively addressing labor, supply-chain, and affordability constraints.

Conversations during the meetings highlighted growing bullishness toward NextEra Energy and Sempra, while near-term political and regulatory developments remain key issues for Public Service Enterprise Group, Southern Company, and PG&E Corp.

Here's a breakdown of the top ten takeaways Davenport had from EEI:

Focus on inflections in regulatory backdrops. Several utilities are experiencing significant state-level policy shifts and ongoing rate case activities. In New Jersey, the upcoming transition to Governor-elect Sherrill's administration and anticipated changes within the BPU are topical. PEG is preparing to leverage mechanisms such as utilizing ZECs to help alleviate customer bills, aligning with the new administration's focus. EXC expects its NJ rate case at ACE to be on track for year-end 2025, and FE noted that clarity on BPU composition will be key ahead of upcoming rate case filings at JCP&L. Elsewhere, ES is focused on securing regulatory approvals for its Aquarion sale and storm cost securitization in CT from a newly composed PURA. Sentiment is growing more constructive on a positive shift in balanced collaboration between utilities and regulators in the state. Finally, SO noted 2026 could be noisy from a state-wide elections standpoint, but with a relatively quiet regulatory calendar, the company plans to actively engage with newly elected commissioners on utility economics and affordability.
Still room for positive capex revisions into 4Q earnings, with focus on financing options. SRE anticipates significant capital plan upside at Oncor, highlighting opportunities around an incremental ~$12 bn on top of the preliminary 30% increase to the current five-year plan, driven by accelerated Permian transmission projects and substantial data center load growth, with a definitive update pending the ongoing rate case outcome. DUK has previewed a robust $95-105 bn capital plan, with an expected update next quarter, and sees the $10 bn upside range driven by LNG solutions and transmission investments, while exploring numerous options around financing, including private credit for specific projects. XEL targets a 9% EPS CAGR through 2030, and has identified significant upside around both generation and transmission, with resource plans pointing to a potential $16-20 bn (though XEL targets 50% ownership of assets) and over $10 bn for transmission projects. FE benefits from the PJM open window, with three identified projects on the RTEP short list totaling approximately $3 bn in potential capital expenditures, in addition to growth opportunities in West Virginia from data centers, with current generation addition plans estimated at $2.2-2.5 bn of capital. Finally, SO mentioned potential capex upside, driven by significant demand growth particularly from large industrial and data center loads in Georgia, in addition to FERC natural gas pipelines.
Potential for greater state involvement to reform PJM. Utilities are increasingly advocating for greater state involvement in reforming the PJM market, driven by perceived market inadequacies and the need for enhanced resource adequacy. EXC advocates for states to take more control over generation procurement through processes like Maryland's dispatchable generation procurement and Illinois's IRP, while also pushing for expedited interconnection and extended price collars within PJM. PEG emphasizes the necessity for New Jersey to implement a comprehensive IRP to define reliability standards, emissions targets, and affordability metrics, suggesting that state-led solutions, potentially including utility-owned storage, gas or nuclear generation, are crucial, and advocating for competitive processes that allow rate-base solutions. FE highlights West Virginia's proactive approach, where the governor is focused on generation, transmission, and energy security, allowing for new generation filings outside of standard IRP cycles to meet rapid load growth, and notes a desire for continued capacity pricing caps in PJM with less traction for longer-duration auctions. This collective sentiment points towards a growing trend where states are stepping in to ensure resource adequacy and guide generation development.
Affordability and bill transparency remain top of mind. As utilities strive to meet rising power demand, affordability remained a key discussion point in our meetings with management. ED's management highlighted that property taxes, which constitute a sizable portion (~20%) of customer bills, will potentially be displayed separately to consumers as part of its joint proposal for its CECONY rate cases, aiming to promote transparency. During our meeting with PEG, management discussed the possibility of refunding ZECs to customers, which could reduce rates by 2%. However, this was viewed as a short-term solution, given that bill inflation in PEG's service territories rose 17-20% year-over-year, largely due to supply cost increases rather than distribution costs for which PEG is directly responsible. Collectively, utilities emphasized that affordability is paramount, with customers and regulators seeking greater clarity, hence the focus on bill inflation targets (e.g., DUK aiming to keep bills below inflation).
EPC relationships matter for capital plan execution. Several utilities are emphasizing the strategic importance of long-term Engineering, Procurement, and Construction (EPC) relationships and partnerships to ensure efficient capital plan execution and manage labor and equipment supply. AEP highlighted that its partnership with Quanta will be key to secure labor and transformers/breakers for grid project execution, while its agreements with Kiewit, allowed for proactively locking in turbine slots. Similarly, DUK underscored its partnerships with EPCs like Zachry and Kiewit to standardize operations and ensure a consistent labor force across multiple sites, while XEL has pivoted from project-by-project RFPs to partnering with key tier-1 EPCs for a multi-year book of business. WEC also highlighted its long-standing relationships with EPCs/developers such as Burns & McDonnell and Invenergy to line up labor and manage project delivery. This positioning is crucial for mitigating supply chain constraints, standardizing equipment, and ensuring a stable, skilled labor force to manage the scale and complexity of current capital plans.
Phase 2 of wildfire policy reform underway, but investors still in wait and see mode. Phase 2 of the California's wildfire policy reform is actively progressing, with Investor-Owned Utilities (IOUs) like PCG, EIX, and SRE collaboratively engaging in the process. Over 30 diverse stakeholders have submitted abstracts, with IOUs filing together to present a unified front on problem identification and solution principles, aiming for a whole society approach to reduce wildfire risk and ensure predictable claims recovery. Key next steps include the submission of detailed white papers by December 12, with comprehensive reports anticipated by January 30 and a final recommendation on April 1, outlining necessary legislative changes and reforms in areas touching insurance, liability, and community hardening. According to PCG and EIX, credit rating agencies are closely monitoring phase 2 developments, with some mainly seeking tangible progress in Phase 2, while others are awaiting the final legislative outcomes before fully assessing the benefits.
Focus on identifying high confidence load from overall pipelines. Investors are increasingly focused on rigorously identifying high-confidence load within utility pipelines, moving beyond speculative inquiries to secure firm commitments. There is a higher degree of focus on signed ESAs, and more concern from investors that LOAs do not have the staying power that they have had previously. Companies are working to cull the speculative inquiries by requiring upfront deposits to conduct load/engineering studies, including FE, WEC, DUK, EXC and AEP. For example, AEP and EXC employ measures such as upfront deposits, take-or-pay contracts, and TSAs or LOAs that can convert to ESAs to identify high confidence load. AEP sees 80% of its LOAs converted to ESAs in PJM, though that share is lower in Texas/SPP. SO also has ESAs for its 2 GW of demand, with customers already funding engineering and site studies.
Customer and financial protections for data center deals are key: Across meetings, minimum take provisions, 12-18 year contract lengths, and termination fees emerged as key considerations, reflecting the push to ensure predictable cash flows amid unprecedented data center led power demand surge. WEC's filed tariff for very large customers includes robust protections: hyperscalers must cover all incremental infrastructure costs, agree to 20-year contracts if seeking renewable generation, and pay for all requested capacity even if not fully utilized. Under the terms of WEC's proposed contract for large load customers, they must pay the net book value if WEC cannot re-purpose assets upon early contract termination, providing downside protection for WEC and its other customers. Overall, managements remained confident that a collapse of the tech driven data center build-out is less of a concern for in flight projects, given the amount of capital tech companies are investing in the facilities. The tone of our meetings remained optimistic, with data centers driving a large portion of power demand in the U.S., but with utilities prioritizing contract discipline and balance sheet protection over headline megawatt wins.
Investors still highly focused on revisions to EPS growth CAGRs. Investors are seeking proof that increased power demand is translating into earnings growth for utilities. Companies that have successfully raised their EPS CAGRs are viewed more favorably on the back of this theme. For instance, XEL, targeting a 9% EPS CAGR through 2030, received positive feedback from attendees. NEE's upcoming investor day is anticipated to bring potential earnings revisions, aligning closer to its historical EPS CAGR of approximately 10%, especially since its current CAGR is lower at 6%-8%. AEP's recent guidance revision to a 7%-9% CAGR, with expectations of achieving 9% actual earnings growth, was also well-received. Some investors have queried if there is upside to DUK's current 5%-7% earnings CAGR over time, given its projected annual rate base growth of approximately 8.5% (at the lower end of its new capital plan) and management's expectation to comfortably reach the top end of the current range by 2028. For SO, growth is projected to be in the 5%-7% range, with 2027 and 2028 likely above the top end, after which the company would re-base off 2028, which was viewed as mixed by investors.
All the above generation technologies needed to meet demand. Renewables remain topical for utilities with investors focused on projects that are safe harbored. NEE also talked about how 8-hour batteries are becoming increasingly cost-competitive, though there are still technology evolutions needed for longer duration options. Nuclear has also been topical where PEG had talked about its opportunity for new nuclear development where it would leverage its existing early site permit but established that it will not direct capex into new nuclear generation to avoid development risk. In meetings, our overall impression was that bridge solutions are not viewed as cannibalization risk due to the amount of demand needing to be met, and that utilities including NEE and AEP are also considering those options to provide better time to power for customers.

The Information : Elon Musk’s xAI Delays Grok 5 Release to Next Year

Elon Musk’s xAI Delays Grok 5 Release to Next Year

XAI plans to release its next-generation Grok 5 artificial intelligence model in the first three months of next year, CEO Elon Musk said on Friday. That’s later than a deadline Musk had previously set of releasing the model by the end of 2025.

In an interview with the investor Ron Baron, who has backed several Musk companies including xAI, Musk said that Grok 5 would be released “in Q1 sometime.” Musk had previously said on X this August that Grok 5 would be out before the end of 2025. During Friday’s conversation with Baron, Musk also said that Grok 5 will have 6 trillion parameters, a key measure of the size of large language models, an increase from 3 trillion parameters for its predecessors Grok 3 and Grok 4.

Additionally, Musk said Friday that Tesla is still interested in building its own chip fabrication plant, an idea he also raised at the company’s shareholder meeting last week. Musk said that Tesla’s existing chip suppliers like Taiwan Semiconductor Manufacturing Company and Samsung would have to build “100, 200 billion AI chips a year in the timeframe that we need them” in order for Tesla to not need its own fab. Musk said he needs the chips for Tesla’s vehicles and the Optimus robot.

WSJ : RFK Jr. Discussed Curbing FDA Head’s Role After Complaints About Managemen

RFK Jr. Discussed Curbing FDA Head’s Role After Complaints About Management Style

Kennedy considered installing a new leader to manage the agency day to day

Trump administration officials discussed concerns about FDA Commissioner Marty Makary’s management, according to people familiar with the matter.
Among the topics discussed was infighting between Makary’s deputies, the people familiar with the matter said.
Despite discussions on limiting Makary’s role, the idea was dropped, with Makary given time to improve his leadership of the agency.

WASHINGTON—Trump administration officials including Health Secretary Robert F. Kennedy Jr. have discussed scaling back the role of Marty Makary, the Food and Drug Administration commissioner, according to people familiar with the matter.

Discussions regarding concerns over Makary’s management included officials at the Department of Health and Human Services, of which the FDA is a part, and later reached the White House, the people said. Among the topics was infighting between Makary’s handpicked deputies, those people said. Kennedy weighed whether to add a leader to run the agency day to day while leaving Makary in place as a figurehead, some of the people said.

Makary pushed back on the idea, people familiar with the matter said. The officials decided to drop the idea for now, giving Makary time to improve his leadership of the agency, those people said. Kennedy remains personally loyal to Makary and wants him to succeed, the people said, though they said the secretary had concerns about how the agency is being run.

Makary, for his part, has been frustrated with what he sees as HHS’s disorganization, people familiar with the matter said.

A spokesman for the FDA referred questions to HHS, and Makary didn’t respond to requests for comment.

“The Secretary has full trust and confidence in Dr. Makary to lead the FDA,” HHS spokesman Andrew Nixon said.

White House spokesman Kush Desai said the White House maintains “total confidence in the entire HHS and FDA team,” adding, “The FDA under Commissioner Makary’s leadership has smashed a broken status quo and overseen one historic MAHA initiative after another.”

Makary, a former Johns Hopkins University surgeon who wrote bestselling books on healthcare costs and modern medicine’s failures, was confirmed in March. He has become one of the Make America Healthy Again movement’s foremost advocates on cable-news programs and at White House press conferences, while also working to reassure drug companies wary of Kennedy’s “Big Pharma” rhetoric and worried about a slowdown in agency approvals. An October analysis by RBC Capital Markets found that drug approvals slowed and rejections increased in recent months.

Two deputies chosen by Makary—the biologics center director, Vinay Prasad, and the drugs director, George Tidmarsh—clashed within the agency until Tidmarsh resigned after an alleged extortion scheme came to light, according to people familiar with the situation. Prasad was pushed out this summer but rehired about two weeks later.

Those staffing challenges caught the attention of some officials at the White House and HHS. Kennedy had a series of meetings in the days following Tidmarsh’s departure this month to discuss concerns about Makary’s management, according to people familiar with the matter.

Health officials told Kennedy that top FDA staff often had difficulty reaching Makary, who avoided email and meetings with some FDA division directors, according to people familiar with the matter.

But Kennedy and Makary patched things up, and the idea to limit his role was dropped, according to people familiar with the meeting.

Prasad has alarmed some drug-company executives worried about his approach in weighing drug benefits and risks. Roughly half a dozen top leaders in his division have left or been pushed out in recent months, people familiar with the matter said.

Prasad and Tidmarsh didn’t respond to requests for comment.

Makary this past week filled Tidmarsh’s role with the longtime leader of the FDA’s cancer-drugs unit, Richard Pazdur. Prasad, before his hiring at the FDA, criticized Pazdur on social media, blaming him for pharma “getting richer” and “the bar getting lower.” Makary on Thursday posted a picture on X of the three of them having coffee together and spoke on his podcast about his excitement to have Pazdur in the role. Makary and Kennedy lobbied Pazdur to take the job, which he initially turned down, and Makary assured Pazdur that Prasad wouldn’t interfere with his work, according to people familiar with the matter.

The discussion over Makary’s position comes as former and current FDA officials say uncertainty has plagued the agency following job cuts, a government shutdown and turnover in the leadership ranks.

Peter Lurie, a former FDA official who is now president of the Center for Science in the Public Interest, said morale inside the agency was very low. “Some of that certainly derives from the remote leadership style in which the concerns of the rank and file seem to be routinely overturned,” Lurie said.

Makary has also clashed with Republican senators over the agency’s approval of a generic form of an abortion pill, after promising antiabortion lawmakers a review of the drug’s safety. Lawmakers have privately discussed with senior leaders at the White House concerns about Makary’s handling of the situation, according to people familiar with the situation.

The review has largely stalled, people familiar with the matter said.

>>> Weekend Papers Summary

FINANCIAL TIMES

-Alibaba has been accused of providing technology support for Chinese military operations against US targets, as outlined in a declassified White House national security memo. This memo contains "top secret" intelligence indicating that Alibaba supplies the People's Liberation Army (PLA) with capabilities perceived as a threat to US security. These claims have not been independently verified. The US is increasingly concerned about Chinese tech companies, particularly regarding cloud services, artificial intelligence, and their potential to access sensitive US data. Specifically, the memo states that Alibaba grants the Chinese government and PLA access to customer data, including IP addresses, WiFi information, and payment records, and has shared knowledge of software vulnerabilities, known as “zero-day” exploits. Alibaba has strongly denied these allegations, labeling them baseless and an attempt to discredit the company.

-Long before political turmoil, the beef market's foundation weakened due to climate change-caused dry spells in the US, impacting pasture quality and hay stocks. Many ranchers, facing high feed costs, sold cows early, leading to the smallest national herd since the 1950s. Live cattle imports from Mexico have been stalled due to a parasite discovery, with a million cattle awaiting crossing. Meanwhile, beef prices rise globally, exacerbated by increased fertilizer and feed costs in the UK and Ireland post-Russia's invasion of Ukraine, alongside droughts limiting forage. Cattle breeding's slow nature complicates herd rebuilding, requiring years to expand. Additionally, a 50% tariff on Brazilian imports has intensified pressures on the industry, further straining the supply against domestic demand.

-Apple is enhancing its succession planning as Tim Cook prepares to potentially step down next year after over 14 years as CEO. Discussions among the board and senior executives suggest John Ternus, the senior vice-president of hardware engineering, is a leading candidate for succession. The transition is not linked to the company's performance, which is anticipated to be strong during the upcoming holiday sales. A new CEO announcement is unlikely before late January's earnings report, allowing for a smooth transition before major events like the June developer conference and the September iPhone launch.

-Donald Trump announced plans to sue the BBC for $1B to $5B following their rejection of his compensation demand over a misleading edit of a 2021 speech. He claimed the BBC altered his words, asserting this was worse than CBS’s previous editing of comments made by Kamala Harris. The BBC apologized for the edit but maintained there is no basis for a defamation claim. Trump has also pursued legal actions against US media, including CBS and ABC, winning settlements totaling $31M.

-The billionaire commodities executive, Torbjörn Törnqvist, is pursuing a $22B acquisition of Russian oilfields and assets from Lukoil, despite recent US sanctions on the company. Attending the Adipec conference in Abu Dhabi, Törnqvist defended his actions as a means of distancing from Russia, claiming it represents a "clean break" from the past and not a favor to the Kremlin. He acknowledged the challenge of securing approval from Washington for the deal while facing speculation regarding his connections to Russian leadership.

-The US has authorized companies to negotiate the acquisition of Lukoil's international assets ahead of impending sanctions effective November 21. The Treasury has issued a license allowing negotiations until December 13, following the blockade of Gunvor's purchase efforts. Carlyle has expressed interest in the assets but has not yet conducted due diligence. The Treasury will likely reject any deal unless it ensures Lukoil is permanently cut off from its international business and funds are placed in blocked accounts. Lukoil recently announced plans to sell these assets shortly after the sanctions were imposed to pressure Russia for a ceasefire in Ukraine.

-US President Trump has reduced tariffs on various agricultural imports to lower grocery prices amid poor inflation ratings. An executive order exempts certain fruits, beef, cocoa, coffee, tea, spices, and some fertilizers from "reciprocal tariffs" enacted in April. This decision represents a significant reduction of previous tariff policies, aiming to alleviate consumer costs. The move follows a decline in Trump's approval ratings regarding the economy, currently at 41%, with 56% disapproval. The US Chamber of Commerce has endorsed this action and called for further similar measures.

-Porsche faces a $300M lawsuit from Florida dealership The Collection, which accused the German carmaker of using "strong-arm" tactics and withholding vehicle allocations after the dealer declined to build a standalone Porsche showroom. Attempts by Porsche AG to distance itself from the case were rejected by a Miami judge, with a trial set for March next year. The lawsuit highlights tensions between Porsche and US dealerships amid declining vehicle sales and a shift in EV strategy. Legal expert Sean Burstyn noted that the case reflects broader dealer-manufacturer relations in the US, given similar regulations nationwide.

-China's tomato paste exports to Italy have plummeted this year due to allegations of forced labor in Xinjiang and misleading origin labeling by some Italian firms. The increase in tomato cultivation in Xinjiang has not translated into sales, leaving a significant stockpile of unsold paste. The Italian farming association Coldiretti intensified efforts to protect local tomato products from cheaper Chinese imports. Francesco Mutti, CEO of an Italian ingredient maker, hailed the situation as a victory for local producers. Heightened scrutiny of the supply chain revealed that some companies mixed Chinese paste into products marketed as Italian, contributing to the current stockpile of 600,000 to 700,000 tonnes in China, roughly six months’ worth of exports.

-South Africa has achieved its first credit upgrade in 20 years as S&P Global Ratings raised the country’s sovereign rating to BB from BB-, primarily due to reforms and increased fiscal revenue. The agency's outlook is positive, indicating potential improvements in fiscal metrics and stabilization of government debt. This upgrade reflects a significant turnaround under President Cyril Ramaphosa, moving from a period of power blackouts and political crisis to structural reforms. The upgrade raises hopes for future upgrades from other agencies and potential restoration of investment-grade status. Additionally, rolling blackouts have been avoided this year, and Eskom, the state power company, has returned to profitability after previously facing losses and bailouts.

-New York Federal Reserve president John Williams held an unreported meeting with Wall Street dealers to address concerns over US money market strains. The meeting, occurring during the Fed’s annual Treasury market conference, aimed to gather feedback on the standing repo facility, an essential tool for managing short-term borrowing costs. Representatives from the 25 primary dealers participated, focusing on the facility’s effectiveness in monetary policy. A New York Fed spokesperson confirmed the discussion's intent to ensure continued efficacy in rate control.

-The divergence in oil demand forecasts from the International Energy Agency (IEA), OPEC, and the US Energy Information Administration (EIA) has reached 1.8M barrels per day, marking the widest gap in over two decades. This disparity, attributed to varying outlooks on global oil demand amid the transition to clean energy, reflects concerns over potential supply shortages from US sanctions on Russian oil firms alongside expectations of a long-term glut due to increasing US shale production. Brent crude prices have fluctuated, peaking at $82.63 per barrel in January before dropping to approximately $64 per barrel by Friday.

NEW YORK TIMES

-The Trump administration is intensifying its pressure on Venezuela, positioning the USS Ford aircraft carrier within striking distance. President Trump has been reviewing military options over two days, including Special Operations forces, though it remains unclear what action he plans to authorize. Trump's statements suggest he has made some decisions regarding Venezuela, emphasizing progress in drug control. Meanwhile, Venezuelan President Nicolás Maduro has put his forces on high alert. An aggressive stance is noted with the naming of the operation "Southern Spear," aimed at removing "narco-terrorists" from the region, and significant military presence includes 15,000 troops and accompanying naval forces.

-On Friday, Mr. Trump reiterated unfounded claims about investigations into Democrats linked to Mr. Epstein, downplaying Epstein's mentions of their relationship. On a flight to Florida, he stated their relationship was negative, instead urging inquiries into what Epstein knew about Bill Clinton and other figures. Contrarily, Ms. Bondi's decision to continue the investigation contrasts with a previous memo from the Justice Department, which found no basis for further inquiries. Trump’s comments, which named Clinton, Larry Summers, and Reid Hoffman, prompted a rebuttal from Clinton's spokesperson claiming it was a distraction. Hoffman urged Trump to release all Epstein files to refute allegations of political persecution. Trump also called for investigations into JP Morgan amid findings of the bank’s longstanding ties with Epstein.

-When President Trump called for an investigation into ties between Jeffrey Epstein and prominent Democrats, US Attorney General Pam Bondi appointed Jay Clayton, a Trump ally and head of the Manhattan U.S. Attorney's office, to oversee the politically sensitive assignment. Clayton, a seasoned corporate lawyer without prior prosecutorial experience, must navigate the political implications of this order while upholding the independence of his office. Former Manhattan District Attorney Cyrus R. Vance Jr. believes Clayton will not compromise the integrity of the office to satisfy presidential demands. As Clayton's tenure progresses, his handling of this directive will be a critical test of his role and the office's autonomy.

-President Trump has severed ties with Representative Marjorie Taylor Greene, who was once one of his staunch allies. Greene has diverged from Trump, particularly by advocating for the release of documents related to convicted sex offender Jeffrey Epstein. In a recent social media post, Trump announced he is withdrawing his support for her, criticizing her for constantly complaining and labeling her as a nuisance. He noted that despite previously defending her against criticisms over her conspiracy theories, he can no longer engage with her, citing the demands of his other responsibilities and connections.

-The Trump Organization is negotiating to potentially brand a property in a major Saudi real estate development, as announced by Jerry Inzerillo, CEO of the project. This represents an ongoing trend of President Trump intertwining governance with his family business interests, especially in Gulf countries. Upcoming discussions with Crown Prince Mohammed bin Salman in Washington may link national security matters with Trump's business endeavors, as the prince oversees a $63B transformation of Diriyah into a luxury hub. Inzerillo indicated that a deal with the Trump Organization is likely imminent.

-In late 2024, following the U.S. presidential election, Saudi real-estate firm Dar Global announced significant plans involving the Trump brand, aiming to develop at least three new projects in Saudi Arabia in partnership with the Trump Organization. This collaboration has positioned Dar Global as the Trump Organization's most crucial international partner, contributing $21.9 million to the Trump family business last year. The firm, linked to one of Saudi Arabia’s largest developers, has leveraged the Trump name for global recognition and recently opened a U.S. office in Trump Tower. CEO Ziad El Chaar indicated future projects in Saudi Arabia amidst extensive government development initiatives.

-After allegations of institutional bias due to misleading edits of President Trump's speech, BBC executives quickly prepared a public statement admitting fault regarding footage manipulation from January 6, 2021. However, internal disagreements prevented timely communication, leading to seven days of silence during which criticism escalated, culminating in the resignation of BBC's director general Tim Davie and news chief Deborah Turness. The incident sparked significant debate about the BBC's perceived bias and has implications for its funding and legal standing, amidst threats of lawsuit from Trump. This account draws from interviews with multiple BBC employees and public documents.

-Last month, Tucker Carlson's interview with white nationalist Nick Fuentes created significant upheaval within the Trump-era conservative movement. Carlson subsequently took a break for bird hunting, during which he expressed indignation and unrepentance regarding the controversy. He controversially stated, "Israel does not matter," dismissing its strategic importance and contradicting longstanding presidential views. Carlson also expressed confusion over the backlash against Fuentes, questioning why critiques from conservative commentator Ben Shapiro, who labeled Fuentes as antisemitic, were seen as significant.

-Three winters of Russian attacks on Ukraine’s power grid have forced Ukrainians to adapt to living without electricity. As blackouts continue, families turn to power banks and headlamps for light, with some seeking refuge in malls to recharge devices. However, with expanding Russian strikes targeting gas infrastructure, there are fears of losing essential heating and cooking sources. Gas supplies have been crucial during the winter, and officials warn that this could be Ukraine's harshest winter yet, as 80% of households depend on gas for heat and cooking.

-The young Chilean president Gabriel Boric, who was elected at 35 amid social unrest and promised significant reforms like social justice and affordable housing, initially energized young voters and was a symbol of progressive politics in Latin America. However, as his term nears its end, support has dwindled, and Chile faces national elections with a right-wing candidate, José Antonio Kast, favored to win. Despite Boric's early promise, the political landscape appears to be shifting rightward.

NEW YORK POST

-A $20M defamation lawsuit filed by IRS whistleblowers Gary Shapley and Joseph Ziegler against Hunter Biden's attorney Abbe Lowell reached a settlement. The lawsuit, initiated in September 2024, accused Lowell of defaming the IRS employees by claiming they illegally leaked private tax information about Hunter Biden. Although a federal judge dismissed the case last month, the whistleblowers considered an appeal. The settlement included an acknowledgment from Lowell that Shapley and Ziegler were authorized to disclose otherwise confidential tax information to Congress and that they believed they acted in good faith, not disclosing any confidential information.

-New York City's socialist Mayor-elect Zohran Mamdani is calling for a boycott of Starbucks as its workers go on strike nationwide over unfair labor practices. Mamdani, a pro-union advocate, encourages his followers to avoid buying Starbucks products, stating, "No contract, no coffee." His transition spokesperson emphasized that he will support labor unequivocally. The strike coincides with "Red Cup Day," a significant sales event for Starbucks, though the company reported that nearly all its stores remained open.