• Is the AI Capex Bubble About to Burst? What 250 Years of Market History Tell Us. The spending on artificial intelligence will end, but probably not when investors suspect it will.  (Barron’s)

• Rampell: Wall Street Loved Scott Bessent and Kevin Warsh. Not Anymore.: Catherine Rampell on how the bond market soured on the Treasury secretary and the Fed chair it once cheered. (New York Times).see also Rising bond yields add tens of billions to G7 countries’ debt costs World’s biggest developed economies face higher financing costs since start of US-Iran war, weighing on. (Financial Times)

• Ordinary Abundance: Edward Bellamy once imagined that music on demand would be “the limit of human felicity.” A modern apartment is full of things that once drew the same kind of awe. A meditation on the wealth hiding in plain sight — the ordinary comforts, capabilities, and freedoms that would have astonished every previous generation. (Ordinary Abundance)

• Six Conversations About Money You Should Have Before Getting Married: Heather and Douglas Boneparth with the words of wisdom they wish someone had shared with them many moons ago. Planning the life you’ll have together takes a lot more than looking at your bank accounts. Here’s how to get started (The Joint Account)

• How Big Tech Blinded Itself to the Grassroots AI Revolt: Caught in its own echo chamber, the industry’s playbook is failing — and the messier things get, the more out of touch tech leaders appear, even with Anthropic and OpenAI IPOs looming. (Wall Street Journal)

• Why Your Weather App Sucks: Forecasts are more accurate than ever. Why doesn’t it feel that way? Nitish Pahwa on why “30 percent chance of scattered thunderstorms” becomes a partly-cloudy icon — correct for 70 percent of your area, soaking wrong for the rest.  (Slate)

• Why America Is Switching From Booze to Weed. Derek Thompson on two extraordinary simultaneous trends — the share of Americans who drink is at a record low since Gallup began tracking in the 1930s, and 66% of under-35s now say moderate drinking is bad for your health, up from under 30% in 2004. (Plain English)

• Earth’s Oceans Just Broke a Heat Record. The Implications Will Be Massive: Anthony Edwards on Friday’s warmest globally averaged sea surface temperatures in recorded history, amid a surging El Niño and long-term warming. (San Francisco Chronicle) see also 2026: A Climate ‘You Are Here’: Thomas Neuburger closes his series on this year’s record Super El Niño with a look at what’s coming over the next ten years (God’s Spies by Thomas Neuburger)

• Trump tried to scrap NASA’s Roman Space Telescope last year. Now it’s launched: “People were giving up their weekends, and at the same time, there was this compartmentalized knowledge that it could all get cut.” Josh Dinner on the flagship observatory’s final hours before liftoff, freshly encapsulated in its payload fairing. (Space.com)

• Wilde at heart Is Olivia Wilde doing male narcissist autofiction? Olivia Wilde is a woman making choices in her professional and personal life; isn’t that feminism? (Dirt)

Video of the day: Japan’s Honda Is Taking Over the World’s Skies — And Nobody Knows

Be sure to check out our Masters in Business with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

ICE Arrests Soar as People With No Criminal Record Are Increasingly Targeted

Source: New York Times

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1. What you’ve got to know is she WROTE those songs!

So it’s October 1973. I’m driving with the top down on my 1963 Chevy Impala trying to get something on the radio.

This was before cassette decks. Sure, you could buy an aftermarket 8-track, but they sat under the dash and were notorious for getting stolen. Furthermore, the 8-track format itself was wonky. With the movement of the heads from track to track…tapes wore out quickly and thus were a bad investment. Which is all to say when you were in the hinterlands, long before the days of Bluetooth, never mind satellite radio, you’d drive down the highway with your right hand on the radio dial, trying to pull in a listenable station.

Now this was in the hinterlands of Vermont. Needless to say, this ’63 convertible didn’t have FM, not that there was a station broadcasting in the backwoods. But AM signals travel further and…

What you notoriously got was rural news, the farm report, and country music. In an era where no proud rocker followed what was going on in Nashville.

Sure, Ringo made a record in Tennessee. But most of us in the north had never even been south of the Mason-Dixon Line, unless it was the hop, skip and a jump to Florida. We wrote off the south, that’s where you went with your long hair and got attacked by rednecks.

Now don’t confuse today’s country music with yesteryear’s. Today’s country is the rock of the seventies. Back then, it was people with high hair singing twangy songs…

Sure, there was a TV show, “Hee Haw.” But this was long before the average fan of the Fab Four gave props to Roy Clark for his picking ability. As for Buck Owens…we couldn’t find Bakersfield on a map, never mind name a single song of his.

Sure, we knew Roger Miller from the AM radio of the sixties. “Trailers for sale or rent…” This was what we endured to get to the Beatles.

But I’m in a pensive mood, wondering how I’m going to endure another year of college, it’s a brisk day and I stumble on to a station and what comes out is “Jolene.” It was not only the first time I heard the song, it was the first time I’d ever heard Dolly Parton. She hadn’t crossed over, she wasn’t featured on Top 40 radio in the metropolis. But rather than continuing to mosey down the dial, looking for some rock, I listened.

“Jolene, Jolene, Jolene, Jolene”

This was rootsy. Not that different from those Bonnie Raitt albums I was enamored of. This was not drippy drama, songs to sleep to. I could relate. And I never forgot it.

2. Now we knew who Dolly Parton was. I mean how could you not? With that hair and those boobs?

But the real breakthrough into the mainstream was “9 to 5.” Back when Jane Fonda could open a movie and a flick like this could garner an audience. “9 to 5” was a staple. Everybody saw it. And what they saw in Dolly Parton was someone who didn’t deny her roots, but was in on the joke. That was the thing about Dolly Parton, she had a sense of humor, she could make fun of herself. Not to mention writing the title song, which went all the way to number one and earned her an Oscar nomination.

Dolly Parton was now part of the firmament.

From the holler, but never lumped into the same bucket as Loretta Lynn and George Jones, no matter how talented they might have been. Dolly Parton was now mainstream, when those other acts were not. They were still inhabitants of the country ghetto, Parton had transcended that.

And she maintained this status for the next half century. To this day! Most people have ups and downs, their careers wax and wane. People change their opinions on them. But not Dolly Parton. Somehow by being aw shucks and exhibiting all that talent, she was embraced.

And, once again, she was in on the joke. She’d go on late night TV and play the role. You’d think she was ditzy, almost a bimbo, and then she’d let out a zinger showing that she was as sharp as you and me and to underestimate her was a mistake.

3. But Parton’s crossover appeal, the cementing of her credibility amongst those who were not country fans, was the 1987 “Trio” album, which she made with Linda Ronstadt and Emmylou Harris.

I bought that album, played it too. It was a natural extension of the country rock that began with “Sweetheart of the Rodeo,” which always had a place in the firmament, it never died.

Now the funny thing is the true star, the person who could make it happen, was Linda Ronstadt, who was a superstar in the seventies and then broadened her purview to the stage with “Pirates of Penzance” and then cut three albums of standards with Nelson Riddle. If Ronstadt’s name was on it, it sold.

And in truth, Linda had much more broad-based musical success than Dolly, more hit albums, but now, nearly forty years later…

Linda’s star in the public firmament has faded, yet Dolly’s shines as bright as ever.

Because Dolly wrote.

That’s what makes it so you’re remembered. The songs.

And Dolly’s songs were personal. And her story from there to here was one of lifting herself up by her own bootstraps. Gloria Steinem may have gotten all the ink, but Dolly was just as much of a role model for women’s liberation, if not more.

Dolly wrote for herself. And the personal is universal, when you do it right.

And she was so damn likable. Without being syrupy sweet, without shaving off all of her rough edges. She played the game with a wink. And those who play and can beat the odds doing it their way…we cotton to them.

4. And then there was the whole kerfuffle with the Rock & Roll Hall of Fame.

Unlike the desperate with a chip on their shoulder, looking for the accolade as a victory lap they can put on their résumé, Dolly thought she didn’t deserve induction, because she wasn’t really a rock artist.

But if you’re going to induct Whitney Houston…

And, of course, Dolly wrote Whitney’s signature song, “I Will Always Love You.” An outstanding performance, but it’s the song that will live on, not Whitney Houston. Look at history, rarely are interpreters remembered, but writing, when done right, is forever.

So Dolly Parton, of all people, is calling the Hall on its B.S. Ironically, she’s standing up for the leather jacketed crowd pissed that pop, never mind hip-hop, is now part of the Hall. She was more interested in the integrity of the institution than the award.

But when Dolly finally acceded, she took the stage, played the guitar and ROCKED! I was there. You couldn’t watch it without a smile on your face. If this was the Rock Hall, she was going to deliver, and she did!

5. Now if you want to know every facet of Dolly’s career, there are plenty of obituaries to fill that need. You can go on Spotify and listen to her catalog. I’m no expert.

I’m just like so many of you. Country music of the sixties and seventies was not my bag (Although I did love Charlie Rich’s “The Most Beautiful Girl”… Then again, do youngsters even know that classic? I don’t see any of them covering it. But young acts continue to cover “Jolene” and other Dolly Parton songs.), but Dolly Parton was an exception. We all knew her, she was embedded in our hearts and minds. As much as she appeared, she was never overexposed, we were always glad to see her. She was like someone from down the street, dropping by for a cup of coffee, gossiping with relish. She was more than a performer, she was a person!

I know you know what I’m talking about.

Which is why there’s a national, international outcry over her passing.

Old rockers? They’re dropping like flies. Then again, when they’re not on the road…out of sight, out of mind. But Dolly Parton never left the news. And she’s left a hole that cannot be filled, because she was sui generis, there was only one Dolly Parton.

And there will never be one again.

Just like the Beatles were a product of post-war Liverpool…

Dolly Parton was a product of a rural America that has expired with modernity. Sure, there’s still poverty, but there’s also flat screen TVs and smartphones and the internet…

Actually, all you can really do is marvel. At what Dolly achieved, and she never rested on her laurels, she continued to march forward.

Wow.

~~~

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@Lefsetz  http://www.twitter.com/lefsetz
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~~~

Originally published by Bob Lefsetz at the Leftsetz Letter

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• ‘A Deal Written in Pencil’: Tariffs Are Erasing America’s Credibility: David Hebert on the lesson Mark Carney says Canada drew from 18 months of dealing with Washington, after the US slapped a 50% tariff on $20 billion of Canadian goods. (The Daily Economy)) see also Wiped Out: US Faces Surging Toilet Paper Prices amid Trade War with Canada: Lauren Aratani on Carney’s vow to match US tariffs “dollar for dollar.” (The Guardian)

• The Government Report That Made Me Stop Trusting Our Statistical Agencies: Jared Bernstein has spent years waving people off this degree of mistrust. He writes that he no longer can. (Jared Bernstein)

• Bitcoin Treasury Companies Shed $80bn in Value as Business Model Unwinds: Nikou Asgari on an FT analysis of the 50 largest corporate bitcoin holders — combined market cap down from $150bn in July 2025 to $67bn today.(Financial Times) see also Bitcoin Is Great (For Systemic Theft of Aid Money): Robin Wigglesworth on a new NBER paper that uses on-chain data to trace exactly where the money went. Jamie Dimon’s acerbic list of bitcoin’s use cases holds up better than its defenders would like. (Financial Times)

• Logging In Was Never Supposed to Be This Complicated: Will Oremus on password managers, passkeys, and the tyranny of the two-factor-authentication code. (The Atlantic)

• The Teaser Period: Why the AI Boom Is Built to Break: Groundbreaker rewinds to summer 2006, when prices had risen for a decade, delinquencies were near record lows, spreads were tight, and the securitization machine hummed. Ask a trading desk then whether the mortgage market was months from seizing and most would have laughed. Trillions in compute commitments come due in 2027–2028. The hidden mechanics reveal how the AI boom breaks, and when. (Groundbreaker) see also Wiggleswroth: This Is How the A.I. Debt Binge Sinks the Economy: In other words, if 2025’s A.I. frenzy was merely bonkers, we are now entering the territory of bonkers squared — or perhaps even bonkers cubed. Robin Wigglesworth on the hyperscalers’ borrowing spree — if 2025’s AI frenzy was merely bonkers, we are now entering the territory of bonkers squared, or perhaps bonkers cubed. (New York Times)

• A State Gave Sheriffs 20% of Its Opioid Settlement Cash. We Followed the Money: Aneri Pattani on Louisiana sheriffs spending millions in settlement funds on law enforcement gear rather than treatmentt (Stat)

• They Dedicated Their Lives to Teaching. Then the Deepfakes Started: Caroline Haskins on teachers like Luis DeSantiago, whose likeness turned up in AI-generated photos circulating among students on social media. The deepfake epidemic in schools is affecting more than students. Four teachers tell WIRED about becoming targets of sexualized, AI-generated content—and how difficult it was to find accountability. (Wired)

• America Has 3 Billion Words of Legal Code Riddled With ‘Policy Sludge’: Outdated rules are gumming up governments across the country. Daniel E. Ho of Stanford: the Fed still sends Congress an annual report on the Presidential $1 Coin Program, years after the coins stopped being minted for circulation. Federal law demands it. (Washington Post)

• Josh Shapiro is battling RFK Jr. over measles, and the politics are getting messy: Rachel Roubein on the heated call between the Pennsylvania governor and the health secretary, minutes before Shapiro announced two measles-related deaths. A feud between the Pennsylvania governor and health secretary sparked by this week’s reports of measles-related deaths laid bare the increasingly polarized politics of public health. (Washington Post) see also RFK Jr Lied in Senate Confirmation Hearings, Newly Revealed Documents Indicate: Michelle R. Smith on letters obtained by the Guardian and AP contradicting the health secretary’s sworn testimony that his 2019 Samoa visit had “nothing to do with vaccines.”Letters obtained by Guardian and AP contradict testimony that 2019 visit to Samoa had ‘nothing to do with vaccines’ (The Guardian)

• Dolphins and other lovers: The Andoque of the Amazon know what we have forgotten: the forest’s most beautiful creatures are also its most dangerous (Aeon)

Video of the day: Your Reality Is a Simulation

Be sure to check out our Masters in Business with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

One of two measles-related deaths of unvaccinated people in Pennsylvania was an infant

Source: CNN

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• Who Pays the Cost When Americans Opt Out of Science?: Adam Frank thought science denial would hit a bottom once people experienced the direct consequences of being wrong. It turns out he was wrong. Astrophysicist Adam Frank used to think the consequences of rejecting science would play out on the individual level. He’s since changed his mind. (Big Think)

• Imagine an Organism: Imagine a human infant. And imagine, further, part of its development. The organism gestates for some time, eventually developing a visual system, a hearing system, a phonatory system, and some means of locomotion, among other things. It enters the world mostly fully formed, though not fully grown, and reacts to it in ever-changing ways during its physical development. It starts sorting out the world right away, and within 10 months has created a rich knowledge base, building categories of two main kinds – verbal and visuo-spatial – which in time will give rise to more abstract concepts. In particular, the organism puts together linguistic meanings (for gestures, words, and phrases) on the verbal side, and spatial relations and object categories on the visuo-spatial side; in time, these two kinds of categories will combine into more general representations. David Lobina reviews Blaise Agüera y Arcas’s What Is Intelligence? — noting that radiologists are still around, despite Geoffrey Hinton predicting their demise in 2016. (Inference) see also What To Expect When You’re Expecting (A World of Multi-Agent Systems): How do we model the future of work? It takes an AI village. Researchers gave a set of AI agents a shared goal, memory files, individual virtual computers, and a group chat, email, and Google Docs — then watched. The result is the AI Village. How do we model the future of work? It takes an AI village. (Asterisk)

• App Life in China Notes on a Long-Delayed Return to China: It may be hard to make money in China in 2026, but it is very pleasant to spend it. A major element of involution is the brutal competition in every market that puts downward pressure on prices as consumers, spoiled for choice, demand higher and higher quality. Hotels, trains, flights, food, clothes, cars, phones, electronics, massages, mountaineering gear, Labubus: all are cheap compared to the United States. (ChinaFile)

• Einstein’s Miracle Year: Many attempts have been made to explain relativity to non-scientists, among them several by Einstein himself, beginning with Relativity: The Special and General Theory (1916, first published in English in 1920). It is still in print today, though despite having had so many readers it has not succeeded in persuading the general public to abandon fundamental intuitions about space, time, mass, motion and gravity in favour of the deeply counterintuitive view of the physical world put forward by Einstein. Our minds and imaginations remain stubbornly Newtonian. Most of us find it hard to shake the instinctual belief that an apple falls to the ground because it is pulled there by the force of gravity, the same force that keeps the planets in their orbits. (London Review of Books)

• The Church of Raising Cane’s: The hottest restaurant chain in America is inspiring people to fly 16 hours to try it. I went to find out why—and I saw too much: Steffi Cao joins the Church of Raising Cane’s — a chain inspiring people to fly 16 hours for chicken fingers. “I went to find out why—and I saw too much.” The hottest restaurant chain in America is inspiring people to fly 16 hours to try it. I went to find out why—and I saw too much. (Slate)

• LIV Long and Prosper: Dispatches from the End of an Era: Loathe it or love it, LIV Golf was a gift from the content gods. Lives were changed, fortunes amassed, legacies elevated and reputations shattered. It all came to an unceremonious end on Sunday night in Indianapolis. Flash mobs and the Rhino Jive, NFTs and positive EBITDA — four and a half years of LIV Golf’s fever dream come to a close in Indianapolis. (Skratch)

• The Kill Switch for Harmful Genes: Saloni Dattani on why biomedical research has spent decades as a boot stamping on a biologist’s face — the boot labeled “medicinal chemistry” — and the new class of drugs that changes the equation. (Works in Progress) see also Every Disease Is a Policy Failure: Mathias Kirk Bonde on why doubling global life expectancy in a century fails to register. (Works in Progress)

• The most influential works of American culture: Elvis Presley, Bob Dylan and the iPhone were the most cited omissions on The Post’s list. Carla Spartos on what readers said the Post’s list of 25 left out — one work per decade since the founding was never going to satisfy anyone, and monuments were the first complaint. (Washington Post)

• The Qataris Gave Trump an Airplane. He Crippled Their Country in Return. The tiny Gulf state is learning that the U.S. president doesn’t always keep his end of the deal. Shane Harris on the repurcussions. (The Atlantic)

• An Oral History of Tim Curry’s Escape to the One Place Uncorrupted by Capitalism: Is it the sweet transvestite from Transexual, Transylvania in The Rocky Horror Picture Show, is it Wadsworth the butler who butles in Clue, is it Stephen King’s sewer clown in It? Or is this—seriously, this short, ridiculous cutscene from Red Alert 3—the defining performance of Tim Curry’s long career? (Vice)

Video of the day: Martin Scorsese Breaks Down His Most Iconic Films | GQ

Be sure to check out our Masters in Business next week with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

The Market, Not The Fed, Now Sets Long Rates

Source: Apollo

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Today was Fed Chair Kevin Warsh’s first speech as chair at Jackson Hole. The line that stood out to me was not his discussion of AI, but rather, “The Fed should be humble and never naïve.” So let’s delve into the idea of a more humble Fed…

My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors. One cannot help but notice how similar mistakes are made by these collections of people operating within large organizations.

One side effect of this, as a market and economic observer, is seeing the errors made by giant institutions. Not just big asset management firms, but the Federal Reserve, Treasury, Congress, corporations, and other institutions; they can – and all too often do – engage in the same behavioral mistakes we see individuals make. After all, large institutions are essentially collections of individuals, in a hierarchical structure, acting on behalf of their owners, patrons, and constituents.

The difference between individual errors and institutional ones is in magnitude. When Congress screws up, we may get a financial crisis; when the Fed makes a big mistake, unemployment may rise, or inflation may get out of control. The stakes for institutional errors are so much greater than the regular snafus each of us falls prey to.

I, too, would like to see a more humble Fed. I’d like to see less certainty in their beliefs, fewer forecasts, reduced reliance on surveys and inflation expectations, and even less reliance on their belief that they are the dominant player impacting prices. And I’d like to see a greater acknowledgment that their models, while often useful, are also wrong.

Worse, I see little evidence of any humility in the Fed’s 2% inflation target: “The Fed’s price-stability objective of 2 percent, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target.”

Sorry, but that reveals both error and a lack of humility. I have discussed this before, but rather than repeat those complaints, let’s consider the target from the perspective of institutional error and correction.

–2% Inflation Target History: As former Fed Vice Chair Roger Ferguson explained, it is an anomaly that traces back to an offhand political remark by Finance Minister Roger Douglas on New Zealand television in March 1988, in which he said he wanted inflation brought down to “around 0 to 1 percent.”

Thus, the 0–2% band was born and codified by the Reserve Bank Act of 1989. It was adopted by Canada in 1991, the UK in 1992, Sweden, Australia, and Finland in 1993, the ECB in 1998, and, finally, by the Fed at the July 1996 FOMC meeting.1 On January 25, 2012, then Fed Chair Bernanke made it official.

–Evidence for 2% is non-existent: Little in the academic literature suggests the 2% inflation target is anything other than an arbitrary number. 2 I will spare you the tedious exercise of reviewing a spate of papers, and instead point you to a survey of 600 economists: more than half would keep the current 2% target, citing the “credibility cost” of changing the target – not what target number is optimal. 3

This is classic institutional behavior: refusing to correct an error for reputational or credibility reasons is simply ego over substance.

–The Post-Pandemic Regime: The largest U.S. pandemic in over a century was followed by the biggest post-World War II fiscal stimulus (as a percentage of GDP). This changed everything: It scrambled supply chains, shifted consumption habits, and upended inflation. In light of massive regime change, one might imagine the Federal Reserve would adapt to radically new and different conditions or acknowledge the error. Yet they have continually failed to do so.

So much for humility…

~~~

All good traders know that their cheapest mistake is their first one — and it should be unwound immediately. Doubling down, refusing to fix a bad trade, failing to acknowledge that conditions have changed — these are recipes for expensive failures.

The 2% inflation target is an accidental anomaly, a political improvisation from New Zealand circa 1988. Hardening it into monetary policy orthodoxy is a classic form of institutional error. The sooner the mistake is unwound, the better off the global economy will be.

We all suffer from cognitive judgment errors. It is an unavoidable aspect of the human condition. If we can better understand how and why these errors occur, we have a fighting chance to correct them. It would be enormously productive for society if our largest, most influential, and most important institutions could do the same.

Previously:
2% Inflation Target is Silly (July 26, 2023)

3% Is the New 2%… (August 3, 2026)

What’s Upsetting the Bond Market? (August 25, 2026)

Five Ways the Fed’s Deflation Playbook Could Be Improved (Businessweek, August 18, 2023)

What Models Don’t Know (May 6, 2020)

Source:
In Our Time Chairman
By Kevin Warsh
Fedewral Reserve, August 28, 2026

__________
1. Greenspan insisted the number stay secret: “If the 2 percent inflation figure gets out of this room, it is going to create more problems for us than I think any of you might anticipate.”

2. Claude tells me the following: “No paper derives 2% as the optimal inflation rate. The number preceded the research, and the literature since points in every direction.”

The specific examples include The Boskin Commission, Akerlof, Dickens & Perry (1996), Blanchard, Dell’Ariccia & Mauro (IMF, 2010), Ball (2014).

3. See “The optimal inflation target: Views from 600 economists,” by Kim Ristolainen, Andrea Ferrero, Esa Jokivuolle, Gene Ambrocio, 21 Jul 2022.

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• Current Issues in Forward Guidance: “Broader communication about reaction function remains essential as long as it is conditional, disciplined, and uncertainty aware. Risks should be clearly spelled out. Central banks may still seek to influence the yield curve, but communication should emphasize the contingencies under which the path would change rather than a promise to deliver it. Scenario-based communication can be helpful in this respect.” (IMF)

• Kenneth Rogoff: Is the Trump Treasury Panicking Over the Level of US Debt?: Kenneth Rogoff on the first signs of panic as US debt surpasses $40 trillion and the steady rise in global long-term rates — which he long argued was inevitable — starts causing real pain. With the federal deficit near 6% of GDP and the national debt over $40tn, America’s fiscal position looks increasingly precarious (The Guardian) see also What a century of data tells us about today’s corporate bond spreads: Low spreads were normal. Are they so again? Duncan Lamont of Schroders on whether 30 years of data is enough to judge credit spreads that are, to use a technical term, piddly. (Financial Times)

• The Fall and Redemption of Bill Miller, Once the Greatest Money Manager of Our Time: Most licked their wounds and moved on, but for those close to the fire, like Miller, whose Legg Mason Value Trust was decimated in the crisis, the healing took longer. “I think his investing genius and record is deeply underappreciated because of the timing of his departure from the Value Trust,” says Chris Davis, chairman and portfolio manager of Davis Advisors. The Legg Mason manager who beat the S&P 500 fifteen years running, lost it all in the financial crisis, and made it back again. (Barron’s)

• How to Stop Being Financially Nihilistic Without Pretending Everything Is Fine: Hanna Horvath answers the question she gets most from readers — “okay, but what do I actually do about this?” — with tactical financial advice that meets you where you are. (Your Brain on Money)

• The Shingle-Style Home Gets Reinvented for the 21st Century: Homeowners are modernizing the historic exteriors by paring back moldings and columns in favor of bolder, more colorful facades. (Wall Street Journal) see also Four Ways to Spot HOA Risks Before You Buy a Home: Buying into a homeowners association means going into business with your neighbors. (Wall Street Journal)

• Where Drones Cannot See, the Ukraine War Is a Deadly Game of Cat and Mouse: Carlotta Gall’s dispatch from the Zaporizhzhia front, where Russian troops infiltrate the overgrown basin of the dam they blew up three years ago and Ukrainian soldiers hunt them at close quarters. (New York Times)

• The Choices We Make About AI Now Are Critical: Bill Gates argues the transition to the AI era will be one of the most turbulent times in human history — and right now, we are not preparing adequately for it. (Gates Notes) see also Bill Gates Says We’ve Passed AI’s Danger Thresholds. Now What?: Mat Honan sits down with Gates in Kirkland. (MIT Technology Review)

• How to spot a psychopath: ‘It’s like the difference between a domestic cat and a wild cat’: Zoe Williams on Robert Hare’s classic 20-trait checklist, developed in 1980 entirely from prison populations — and what it misses. People with persistent predatory personalities cause an inordinate amount of pain. Recently, our shared understanding of them has grown – and it could help protect us (The Guardian)

• MLB players reveal a modern toll of legal gambling: Threats, DMs and encounters: With the proliferation of legal gambling and the convenient access social media platforms can provide, athletes are hearing more than ever from those who tie their checking accounts to their performance. A pitcher coughs up a lead, returns to his locker, and finds the direct messages waiting. The Athletic polls players on what the proliferation of legal betting has done to their inboxes. (The Athletic)

• First Look: What If Matthew McConaughey and Woody Harrelson Really Are Brothers?: Rebecca Ford on the project born nine years ago on a porch in Greece, when the two actors’ kids decided their fathers had to be related. In their new Apple TV comedy series, the actors and best friends play fictionalized versions of themselves as a way to explore a long-standing rumor that they’re actually related. (Vanity Fair)

Video of the day: China Unveils 7 2027 Models and They’re ALREADY Scaring the Rivals

Be sure to check out our Masters in Business this weekend with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

2026: A Climate ‘You Are Here’ Last part of the ‘Super El Niño’ series

Source: God’s Spies by Thomas Neuburger

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• What’s Cool in High School? Personal Finance: Thirty-nine states now require a personal-finance course to graduate — up four since 2024 — while economics requirements are shrinking. (Wall Street Journal) see also Could You Beat a High-Schooler on the New AP Personal-Finance Test?: The College Board rolls out AP Business with Personal Finance this fall. (Wall Street Journal)

• How Universities Should Prepare Founders: Paul Graham on what the YC partners actually look for after 20 years of refining the model — “We’re like grad school. We get them next.” (Paul Graham)

• Wiped out: US faces surging toilet paper prices amid trade war with Canada: Paper products among hardest-hit sectors after trade negotiations broke down, with 25-50% tariffs estimated. (The Guardian)

• Getting Ahead Has Never Been Easy: Ben Carlson on the minor miracles we take for granted — electricity, clean water, indoor plumbing, music on demand — and why not celebrating them is itself a sign of progress. (A Wealth of Common Sense) see also Ordinary Abundance: Edward Bellamy once imagined music on demand would be “the limit of human felicity.” (Ordinary Abundance)

• One Hundred Percent AI: Ted Merz on the dustup after Stanley Druckenmiller used AI to write a WSJ op-ed criticizing Treasury Secretary Scott Bessent. When readers spotted the linguistic patterns, Druckenmiller copped to it: “there’s a reason I moved from an English major to an economics major.” (Ted Merz)

• ‘The Worst I’ve Ever Seen’: Cargo Thefts Have Turned Violent in Pursuit of AI Hardware: Paresh Dave on two recent California incidents that show how far criminal organizations will go to steal servers and other data-center gear. Experts allege that two recent incidents in California show the extreme lengths that criminal organizations are willing to go to to steal servers and other gear meant for data centers. (Wired)

• The Catskills Were Once Considered a Hidden Gem. Now the Secret’s Out: Priced out of the Hudson Valley, wealthy New Yorkers are heading north, pouring millions into home renovations and new builds. Pandemic lockdowns sent a Long Island couple looking for a second home in Sullivan County; they paid $1.65 million on the Toronto Reservoir in 2021. Plenty of people had the same idea. Now the Secret’s Out. Priced out of the Hudson Valley, wealthy New Yorkers are heading north, pouring millions into home renovations and new builds (Wall Street Journal)

• Diabetes can now be easily reversed. Here’s how: With the right steps, it’s possible to put type 2 diabetes into remission and restore healthy blood glucose levels. Ling Thomas on research showing type 2 diabetes doesn’t have to be a lifelong chronic condition — the secret is taking the pressure off our organs. (BBC Science Focus) see alsoIs Expensive Bottled Water Actually Better for You?Megan Tomos on the industry that turned the simplest thing we consume into glacial, iceberg, volcanic, and alkaline varieties — complete with water sommeliers and restaurant water menus. Luxury water can contain different minerals and taste noticeably different. But a remote source, alkaline pH, and high price do not necessarily mean better hydration. (Wired)

• Near-total lunar eclipse is coming up with the Americas in prime position: After being shut out of this month’s total solar eclipse, the Americas will have the best seats in the celestial house when Earth’s shadow briefly envelops the moon. Almost the entire lunar surface will be masked Thursday night into Friday — a whopping 96% — making this an especially deep partial eclipse. Marcia Dunn: after missing this month’s total solar eclipse, the Americas get the best seats Thursday night into Friday as 96% of the moon goes dark. (AP)

• Dolly Parton: Photos From an Extraordinary Life and Career: Alan Taylor’s photo retrospective of the singer, songwriter, actor, and philanthropist, who died this week at 80. (The Atlantic) see also What We Loved Most About Dolly Parton: Is there anyone with a fan base as deep and wide — Christians, union organizers, drag queens, cowboys, Jane Fonda and Donald Trump? (Washington Post)

Video of the day: The rise and fall of Ticketmaster

Be sure to check out our Masters in Business next week with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

Text got cheap. Judgment didn’t.

Source: Grasping Reality

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• Are Inflation-Fighting Bonds on Sale?: I just bought more Treasury Inflation-Protected Securities. Plus, more questions for your adviser about private funds (and happy 96th birthday, Warren Buffett)  Jason Zweig on why he just bought more TIPS. (Wall Street Journal)

• Forget the Bond Rout, Fund Managers Are in Party Mode: Robin Wigglesworth runs the list: Hormuz still closed, an AI boom fuelled by off-balance-sheet exposure, a Fed that may hike, Japan in a bond crisis, private credit stressed, leverage everywhere. And yet. (Financial Times) see also The Most Hated Asset Class in the World: Ben Carlson: in December 2024 it was international stocks, which have run nicely since. Today the same vibes are showing up in fixed income — a lot of intelligent investors want nothing to do with bonds. (A Wealth of Common Sense)

• The Debt-Equity Distinction: A Century of Policy by Accident. American Affairs Volume X, Number 3 (Fall 2026. (American Affairs)

• The Connections That Turned a Precocious Teen Into the Fallen ‘Nostradamus of AI’ A 24-year-old investor was hailed as a visionary and attracted billions—before turning into Wall Street’s latest cautionary tale. (Wall Street Journal).

• Mark Cuban wants to solve wealth inequality by making employers choose between paying higher taxes or giving every member of staff company stock: “I would like to see it so that every single CEO, founder, entrepreneur does what I did, which was to give equity to every single employee,” he said. “The way you’re going to reduce income inequality for anybody who works with somebody is making sure they get shares of stock and then they benefit.” (Fortune) see also Mark Cuban Says He Has the Solution to Growing Income Inequality, and It’s to Reward Every Employee — From CEO to Janitor — With Company Stock: The earlier “What It Takes” podcast version of the argument. (Fortune)

• A New Force Is Increasing Inequality in America: Shira Ovide: evidence is mounting that AI is helping the richest people and cities pull further ahead of everyone else. (Washington Post)

• Rich People Create Money Printers. They Don’t Save a Dime.: BowTied Bull on one of the biggest psyops in history — that the wealthy sit on big cash balances and huge incomes. They don’t; they build assets that throw off cash. (BowTied Bull)

• More U.S. Parents Opting Children Out of Vaccine Requirements, C.D.C. Reports: Francesca Paris: new exemption data lands a week after Trump signed an executive order calling to scale back childhood shots, with measles spreading. (New York Times) see also US Vaccination Rates Fall Again as Exemptions Continue to Rise, CDC Data Shows: Beth Mole: again, the CDC skipped the full report and simply posted the data online. (Ars Technica)

• NASA’s New Space Telescope Is Poised to Discover Hidden Facets of the Universe: Jay Bennett: the Nancy Grace Roman Space Telescope is expected to find as many as 200,000 new planets and probe dark matter and dark energy. The Nancy Grace Roman Space Telescope is expected to discover as many as 200,000 new planets and reveal details about the elusive nature of dark matter and dark energy. (Wired)

• Martha Stewart Recreates Her 1995 People Cover on Her Gorgeous Farm: Ana Calderone catches up with Stewart 31 years after the original cover story opened outside her $1.7 million house on Lily Pond Lane — still an insomniac, still up before dawn, still never slowing down. ‘Street Cred’ and Never Slowing Down: The lifestyle icon invited us to her New York farm, where she reflected on all she’s created — and what’s still left on her never-ending to-do list (People)

Video of the day: I Want to Hold Your Hand: The Hidden Details You Can’t Unhear in The Beatles’ Most Important Song

Be sure to check out our Masters in Business this past weekend with Alex Morris of TSOH Investment Research. He is the author of “Buffett and Munger Unscripted: Three Decades of Investment and Business Insights from the Berkshire Hathaway Annual Shareholder Meetings.” The book was named one of Amazon’s “Best Books of 2025.” To write it, he reviewed every Berkshire annual meeting from 1994 through 2024 — 100s of hours of video covering more than 1,700 shareholder questions over 31 years — after Berkshire released the meeting archives.

2026 Top 100 VC firm results

Source: Stanford GSB Professor on Startups & Investors

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This has been a confusing couple of weeks (years?) for market watchers and bond investors: Yen interventions; announced (but not yet executed) Treasury buybacks; sticky inflation; more (illegal) tariffs; a confusing muddle in the Iran war’s 6th(?) inning; a record $40 trillion debt. Perhaps we have even seen the return of the Bond Vigilantes! 1

This question keeps coming up — first Cash, now Bonds — so it’s probably time to address why the fixed-income market seems to be having a rough go of it lately.

What’s a bond investor supposed to do?

The short answer is to find ways to take advantage of higher yields – my preference is Munis and TIPs – but your answer will be dependent upon your specific age, income, tax bracket, and residence. While you think about that, perhaps an overview of the five 2 biggest crosscurrents currently impacting bond markets might help sort that out.

Inflationary Policies: Everybody has been tiptoeing around this; let’s just say it:

Tariffs + War = Inflation

The Tariffs I (before being struck down by the Court of Trade, the Court of Appeals, and the Supreme Court as unconstitutional) raised prices on numerous imports, from food to finished goods; this was on top of the increase in grain prices caused by the Russian invasion of Ukraine. Then the U.S. war on Iran hit energy prices hard, followed by Tariffs II.

None of these policies show any signs of abating anytime soon. When inflation is sticky, it is all but impossible for the Fed to cut rates. No wonder “Higher for longer” has become the bond traders’ refrain.

Federal Reserve Disruption: Historically, markets seem to challenge the FOMC whenever a new Fed chief takes over. In the current case, Kevin Warsh seems intent on disrupting the way the Fed does its job. From the five task forces Warsh created to review the Fed’s inner workings (!), to changes in how the Fed analyzes economic data, to reducing the number of meetings and dropping forward guidance, the new Fed chief has been antagonizing the bond market.

The tools at the Fed’s disposal include 1) higher federal funds rate, 2) size of the Fed’s balance sheet, 3) tighter financial conditions, or 4) some combination of all three. Now add two new strategies: changing the economic indicators the Fed relies on and dropping forward guidance.

The bond vigilantes’ response? Hitting the sell button on Treasuries, sending yields higher.

What is Neutral?: In case you forgot, the 2% Fed target was a made-up number with no academic or statistical significance that traces back to New Zealand in the 1980s. It made no sense in an era of fiscal not monetary stimulus, and is why I have been saying 3% is the new 2%.

For a variety of silly reasons – Credibility! Legitimacy! Change is scary! – the Fed has refused to revisit this simple truth. Rather than admit the error and move forward, the Fed has doubled down on an inflation target that will not be hit until there is a broad, deep, and painful recession. No thank you.

Bond Buybacks? If you think the financing of AI is circular, then what are your thoughts about the biggest issuer of sovereign bonds in the world buying back some piddly percentage of its own debt? At most, it barely impacts the short end of the curve; at worst, it is an admission of losing control of the narrative.

It is especially annoying to me since I spent most of the 2010s begging Congress to refinance the outstanding debt into 50- or 100-year Treasury bonds at the once-in-a-lifetime close to zero interest rates (See this, this, this, and this).

The bond market sets long-term rates—not the FOMC, not the Treasury Department, not Congress. James Carville was right…

$40 trillion in Federal Debt: Normally, I don’t pay much attention to deficits. After a half century of warnings, with none of the sky-is-falling dangers ever occurring, I have tuned out what is usually a partisan maneuver.  For my entire adult life, as ginormous as the debt seemed, it was innocuous.

Two things make today’s version somewhat different: First, all of the elements discussed above have taken borrowing costs from historically inexpensive to suddenly pricey. On top of that, the profligate spending and tax cuts have accelerated how fast the debt level is increasing. Rapid debt growth and pricier servicing costs are a one-two punch that makes people nervous.

via Bloomberg

The Bottom Line: Pardon me for stating the obvious, but:

Disruption is Disruptive.

Despite clearly stated goals of price stability, lower interest rates, and slowing the growth of inflation, the bond market seems to be bearing the brunt of a series of self-inflicted wounds. From the Fed, there has been a series of questions about a lack of clarity; the Treasury is engaging in gimmickry; White House policies, as enacted, have been counterproductive.

Markets approach all of this from the perspective of Ralph Waldo Emerson, who said, “Your actions speak so loudly, I cannot hear what you are saying…” 3

Previously:
Let’s Talk About Cash… (August 12, 2026)

How Wealth Is Created in America (August 19, 2026)

The Evolution of Alpha (April 3, 2026)

2% Inflation Target is Silly (July 26, 2023)

3% Is the New 2%… (August 3, 2026)

Refinancing America’s Debt:
Fix infrastructure on the cheap while you still can (July 12, 2013)

Do We Need a 50-Year Bond? (May 12, 2014)

The Bonds That Can Cure America’s Ills (March 19, 2015)

Time for a 50-Year U.S. Treasury Bond (May 19, 2016)

Cost of Financing US Deficits Falls (December 18, 2020)

The Greatest Missed Opportunity of Our Lifetimes (October 23, 2023)

A Historic Missed Opportunity (June 3, 2025)

See also:
The Most Hated Asset Class in the World
by Ben Carlson
Wealth of Common Sense August 23, 2026

Druckenmiller: Let the Bond Market Speak:
Rising interest rates are a signal of trouble ahead. Artificially suppressing it heightens the danger.
WSJ, Aug 25, 2026

JPMorgan says Warsh failure to buttress Fed credibility may force a rate hike before year-end
by Dow Jones  Aug 3, 2026,

The Government Report That Made Me Stop Trusting Our Statistical Agencies
Jared Bernstein Aug 22, 2026

Forget the bond rout, fund managers are in party mode
Robin Wigglesworth
FT, Aug 18 2026

JPMorgan says Warsh failure to buttress Fed credibility may force a rate hike before year-end
By Jules Rimmer
Marketwatch, Aug. 3, 2026

The Bond Market Is Returning to the Old Normal
Allison Schrager
Bloomberg, Aug 24 ,2026

KING CARNEY ACTIVATES KONG MODE WITH ZERO F*CKS
Carney Reads the Clock Like a Pro Wrestler
I F*cking Love Australia, Aug 22, 2026

__________

1. My friend (and neighbor, one town over) Ed Yardeni coined the term way back in 1983, while he was chief economist at E.F. Hutton…

2. If we wanted to add a 6th, then I would throw in the Private demand for capital. However, I am not (yet) convinced that the buyers of speculative AI capex boom high-yielding data center paper are the same allocators competing with the government for T-bills and Treasuries.

3. The full quote is: “Don’t say things. What you are stands over you the while, and thunders so that I cannot hear what you say to the contrary.”   -Letters and Social Aims

The post What’s Upsetting the Bond Market? appeared first on The Big Picture.

• The Debt-Equity Distinction: A Century of Policy by Accident: Daniel Peris asks what if much of what we treat as normal is a historical fluke. Modern finance could not exist without widespread debt financing — and the rules that produced it were never really designed. (American Affairs)

• The Moose That Roared: Why US will lose its trade war with Canada: Paul Krugman on how quickly the unthinkable arrived. Two years ago a US–Canada trade war would have seemed absurd — same language, soldiers who died alongside ours in Afghanistan, free trade agreements since 1988, the most recent signed by Trump himself. (Paul Krugman)

• The $500 Billion Experiment to Build 24/7 Markets on Blockchain: Trade.xyz, a little-known market built on top of crypto exchange Hyperliquid, allows speculators to buy and sell blockchain-based oil derivatives continuously, even when traditional markets are closed. The platform has generated some $500 billion in trading volume since launching in October and accounts for more than 99% of activity across Hyperliquid’s third-party market system. (Bloomberg free)

• Meta Is Dying. It’s About Time: Julia Angwin argues that one of the most powerful media companies in the world and one of the most valuable members of the S&P 500 is at the start of a long, slow decline — with aftershocks for the economy and for society. (New York Times) see also Meta Is Dying: David Dayen and Matt Stoller take up Angwin’s argument, casting Facebook, Instagram, and WhatsApp as zombie businesses in the mold of Yahoo, Myspace, and AOL after their peaks. (Organized Money)

• The Trump Intervention That Got the DOJ Off Live Nation’s Back: The antitrust case set out to force the concert giant to sell Ticketmaster. After two White House meetings, the settlement left the company intact.Antitrust case started out aiming to force concert giant to sell Ticketmaster. After two White House meetings, a deal kept the company intact. (Wall Street Journal)

• Once banished to trailer parks, manufactured homes are moving to suburbia: Long stigmatized and banned by many towns and cities, factory-built housing is being reconsidered in some places because of soaring home prices. Julie Weil on factory-built housing getting a second look from towns that long banned it outright — a stigma that soaring prices are steadily eroding. (Washington Post)

• It Is Past Time for You to Quit Elon Musk’s X: The case that whatever value the network still holds no longer covers what staying on it costs you. Yes, I’m talking to you. (Public Comment)

• Behind the Mysterious Symbols Spray-Painted on Our Streets: Michael Kimmelman on markings you have registered a thousand times without once stopping to read — a cross between hieroglyphics and graffiti tags, telling excavators what lies below before the digging starts. You may have registered but never stopped to think about all those colored markings around the city. The marks are everywhere, hiding in plain sight. A cross between hieroglyphics and graffiti tags, they’re mostly put there to tell excavators what’s below ground before crews start digging up the streets. (New York Times)

• Why Scientists Are Using Cheap Picnic Coolers to Protect Some of the World’s Most Endangered Animals: Benji Jones reports from Palau, where a super typhoon had churned the famously postcard-blue water, on low-tech coral rescue in a country with some of the strictest marine protections anywhere. Climate change is killing coral reefs, but this low-tech approach could lessen its destruction. (Vox)

• Hacks Star Kaitlin Olson Laughed and Grieved at the Same Time: While filming her final episode of Hacks, the actor and Emmy nominee was also losing her father, the man who first taught her how to be funny. (Vanity Fair)

Video of the day: The Bet Shaq Lost That Made Him $500 Million Richer

Be sure to check out our Masters in Business this past weekend with Alex Morris of TSOH Investment Research. He is the author of “Buffett and Munger Unscripted: Three Decades of Investment and Business Insights from the Berkshire Hathaway Annual Shareholder Meetings.” The book was named one of Amazon’s “Best Books of 2025.” To write it, he reviewed every Berkshire annual meeting from 1994 through 2024 — 100s of hours of video covering more than 1,700 shareholder questions over 31 years — after Berkshire released the meeting archives.

When will the Existing Home Sales Slump End?

Source: Calculated Risk

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