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U.K., France, China and India have signaled they plan to ban sales of vehicles with traditional combustion engines, undercutting a potential source of crude demand.

Indexing has gone big, very big. For nine in 10 companies on the S&P 500, their largest single shareholder is one of the Big Three. For many, the big indexers control 20 percent or more of their shares. Index funds now control 20 to 30 percent of the American equities market, if not more.

The problem is that the public markets have been cornered by a group of investment managers small enough to fit at a lunch counter, dedicated to quiescence and inertia.

Passively managed investment options do not just outperform actively managed ones in terms of both better returns and lower fees. They eat their lunch.

Let’s imagine that a decade ago you invested $100 in an index fund charging a 0.04 percent fee and $100 in a traditional mutual fund charging a 1.5 percent fee. Let’s also imagine that the index fund tracked the S&P 500, and that the mutual fund ended up returning what the S&P 500 returned. Your passively invested $100 would have turned into $356.66 in 10 years. Your traditionally invested $100 would have turned into $313.37.

Actively managed investment options could make up for their higher fees with higher returns. And some do, some of the time. Yet scores of industry and academic studies stretching over decades show that trying to beat the market tends to result in lower returns than just buying the market. Only a quarter of actively managed mutual funds exceeded the returns of their passively managed cousins in the decade leading up to 2019,

What might be good for retail investors might not be good for the financial markets, public companies, or the American economy writ large, and the passive revolution’s scope has raised all sorts of hand-wringing and red-flagging. Analysts at Bernstein have called passive investing “worse than Marxism.” The investor Michael Burry, of The Big Short fame, has called it a “bubble,” and a co-head of Goldman Sachs’s investment-management division has warned about froth too. Shortly before his death in 2019, Bogle himself warned that index funds’ dominance might not “serve the national interest.”

One primary concern comes from the analysts at Bernstein: “A supposedly capitalist economy where the only investment is passive is worse than either a centrally planned economy or an economy with active, market-led capital management.”

Active managers direct investment dollars to companies on the basis of those companies’ research-and-development prospects, human capital, regulatory outlook, and so on. They take new information and price it into a company’s stock when buying and selling shares.

Passive investors, by contrast, ignore annual reports and market rumors. They do nothing with trading-floor gossip. They make no attempt to research what to invest in and what to skip. Whether holding international or domestic assets, holding stocks or bonds, or using a mutual-fund structure or an ETF structure, they just mirror the market. Big U.S.-stock index funds buy big U.S. stocks just because they’re big U.S. stocks.

At least in a Soviet-type centrally planned economy, apparatchiks would be making some attempt to allocate resources efficiently.

Passive management is merely a giant phenomenon, not an all-encompassing one. Hundreds of actively managed mutual funds are still out there, as are legions of day traders, hedge funds, and private offices buying and selling and buying and selling. Stock prices still move around, sometimes dramatically, on the basis of new data and new ideas.

Still, passive investing may well be degrading the informational content of the markets, messing up price signals and making business decisions harder as a result.

When one of these commodities ends up on an index, the firms that use that commodity in their business see a 6 percent increase in costs and a 40 percent decrease in operating profits, relative to firms without exposure to the commodity, the academics found

Their theory is that ETF trading shifts prices in subtle ways, making it harder for businesses to know when to buy their gold and copper. Corporate executives “are being influenced by what happens in the futures market, and what happens in the futures market is being influenced by ETF trading,”

More broadly, the Bernstein analysts, among others, worry that index-linked investing is increasing correlation, whereby the prices of stocks, bonds, and other assets move up or down or sideways together.

the price fluctuations of a newly indexed stock “magically and quickly” change. A firm’s shares begin to move “more closely with its 499 new neighbors and less closely with the rest of the market. It is as if it has joined a new school of fish.”

A far bigger concern is that the rise of the indexers might be making American firms less competitive, through “common ownership,” in which the mega-asset managers control large stakes in multiple competitors in the same industry. The passive firms control big chunks of the airlines American, Delta, JetBlue, Southwest, and United, for instance

The rise of common ownership might be perverting corporate behavior in weird ways, academics argue. Think about the incentives like this: Let’s imagine that you are a major shareholder in a public widget company. We’d expect you to desire—insist, even—that the company fight for market share and profits. But now imagine that you are a major shareholder in all the important widget companies. You would no longer really care which one succeeded, particularly not if one company doing better meant another company doing worse. You’d just care about the widget sector’s corporate profits, which would go up if the widget companies quit competing with one another and started raising prices to pad their bottom line.

one major paper showed that common ownership of airline stocks had the effect of raising ticket prices by 3 to 7 percent.

A separate study showed that consumers are paying higher prices for prescription medicines because generic-drug makers have less incentive to compete with the companies making name-brand drugs.

Yet another study showed that common ownership is leading retail banks to charge higher prices.

Across firms, executive compensation seems to be more closely linked to a company’s performance when its shareholders are not invested in the company’s rivals, the study found. In other words, firms stop paying managers for performance when owned by the same people who own their rivals.

The market clout of the indexers raises other questions too. The actual owners of the stocks—not the index-fund managers but the people putting money into index funds—have little say over the companies they own. Vanguard, Fidelity, and State Street, not Mom and Dad, vote in shareholder elections

In fact, the Big Three cast roughly 25 percent of the votes in S&P 500 companies.

In an interview with The Wall Street Journal, the chief executive officer of State Street said he thought it was “almost inevitable, when you see this kind of concentration, that it probably will make sense to do something about it.”

But figuring out what the appropriate restrictions are depends on determining just what the problem with the indexers is—are they distorting price signals, raising the cost of consumer goods, posing financial systemic risk, or do they just have the market cornered? Then, what to do about it? Common ownership is not a problem the government is used to handling.

, thanks to the passive revolution, a broad variety and huge number of firms might have less incentive to compete. The effect on the real economy might look a lot like that of rising corporate concentration. And the two phenomena might be catalyzing one another, as index investing increases the number of mergers and makes them more lucrative.

In recent decades, the whole economy has gone on autopilot. Index-fund investment is hyperconcentrated. So is online retail. So are pharmaceuticals. So is broadband. Name an industry, and it is likely dominated by a handful of giant players. That has led to all sorts of deleterious downstream effects: suppressing workers’ wages, raising consumer prices, stifling innovation, stoking inequality, and suffocating business creation

The problem is not just the indexers. It is the public markets they reflect, where more chaos, more speculation, more risk, more innovation, and more competition are desperately needed.

As Tversky and Kahneman have explained, “Chance is commonly viewed as a self-correcting process in which a deviation in one direction induces a deviation in the opposite direction to restore the equilibrium. In fact, deviations are not ‘corrected’ as a chance process unfolds, they are merely diluted.” 

Such contingency explains why sports provide the world’s best reality show. The better team does not win every game.

Its power, its meaning, and its joy are wrapped in its improbability. In retrospect, it seems destined. That the U.S. team was “born for this.” The truth is, despite the power and greatness of Brooks’ speech, it was anything but. 

As Stephen Jay Gould famously argued, were we able to recreate the experiment of life on Earth a million different times, nothing would ever be the same, because evolution relies upon randomness. Indeed, the essence of history is contingency.

Mauboussin describes the “paradox of skill” as follows: “As skill improves, performance becomes more consistent, and therefore luck becomes more important.” In investing, therefore (and for example), as the population of skilled investors has increased, the variation in skill has narrowed, making luck increasingly important to outcomes.

All-time great teams still lose about one out of every three games, all to inferior teams, demonstrating that winning baseball games involves a lot of luck.

Since mean reversion establishes that the expected value of the whole season is roughly 50:50 (or slightly above or below that level), a 60 percent winning percentage being really good means that there is a lot of randomness built into baseball outcomes.

Luck matters. A lot. Yet, we tend dramatically to underestimate the role of randomness in the world. 

The self-serving bias is our tendency to see the good stuff that happens as our doing (“we worked really hard and executed the game plan well”) while the bad stuff isn’t our fault (“It just wasn’t our night” or “we simply couldn’t catch a break” or “we would have won if the umpiring hadn’t been so awful”). Thus, desirable results are typically due to our skill and hard work — not luck — while lousy results are outside of our control and the offspring of being unlucky.

Michael Mauboussin’s The Success Equation seeks to untangle elements of luck and skill in sports, investing, and business

Randomness rules.

the ever-increasing aggregate skill (supplemented by massive computing power) of the investment world has come largely to cancel itself out.

Meanwhile, Smith argues that effort and repetition mean a great deal to athletic success, but that innate talent, which cannot be taught, means even more. Thus practice — even perfect practice — does not make perfect.

 randomness explains why the best team or player doesn’t always win, even though the best will tend to win more often. Being very good merely improves the odds of success. It doesn’t guarantee it. 

we should all recognize that the outcomes in many activities in life combine elements of both skill and luck. Like baseball, investing is one of these. Understanding the relative contributions of luck and skill can help us assess past results and, more importantly, anticipate future results, a point to which Mauboussin pays particular attention.

Lady Luck is crucial to investment outcomes. There is no getting around it. Managing one’s portfolio so as to benefit the most from good luck and (even more importantly) to get hurt the least by bad luck are the keys to investment management. Doing so well is a remarkable skill, but not the sort of skill that’s commonly assumed, even (especially!) by professionals.

In the markets, the average investor underperforms due to costs alone. Poker is similar on account of the house’s rake. Yet most investors — like most poker players and most people generally, due to optimism bias — think they are better (and often much better) than the norm

In a “quasi-experimental” study, researchers set out to examine these questions in poker. They got together a group of both expert and novice poker players to play fixed games, meaning that the players received hands that the researchers had set up – without the knowledge of the players – to test how things would go under various scenarios. The results revealed that while the cards dealt (luck) largely predicted the winner, skill was crucial to reducing losses when players were dealt a bad hand. That’s a true if unsurprising result as far as it goes. But the conclusion of the study (“that poker should be regarded as a game of chance”) is clearly overstated.

It’s surely true that over the short term, luck dominates skill in poker. However, over longer and longer periods of time – a much larger database of hands – a slight skill advantage will result in a positive win rate because no player will have better cards in the aggregate. In other words, given enough time, luck cancels itself out.

As Silver argues in The Signal and the Noise, especially when the skill differential is not great, the interesting question is how long it will take for skill to win out.

consistent with the study – the primary reason is that the expert player makes fewer mistakes. Science seeks the truth by uncovering and discarding what is false. What’s left is likely to be true.

As noted above, we all like to think that our successes are earned and that only our failures are due to luck – bad luck. But the old expression – it’s better to be lucky than good – is at least partly true. That said, it’s best to be lucky *and* good. As a consequence, in all probabilistic fields (which is nearly all of them), the best performers dwell on process and diversify their bets. You should do the same.

what we should already know – market success (however defined), especially over the relatively short run, is more a matter of luck than of skill.

nvestment performance data support this idea unequivocally. As Charley Ellis has shown, “research on the performance of institutional portfolios shows that after risk adjustment, 24% of funds fall significantly short of their chosen market benchmark and have negative alpha, 75% of funds roughly match the market and have zero alpha, and well under 1% achieve superior results after costs — a number not statistically significantly different from zero.” 

As Silver emphasizes in The Signal and the Noise, we readily overestimate the degree of predictability in complex systems [and t]he experts we see in the media are much too sure of themselves (I wrote about this problem in our industry from a slightly different angle…). Much of what we attribute to skill is actually luck.

Plan accordingly.

“If Russia is unable to find a legal way to make these payments, and they technically default on their debt, I don’t think that really represents a significant change in Russia’s situation,” Ms. Yellen said. “They’re already cut off from global capital markets, and that would continue.”

“We can only speculate what worries the Kremlin most about defaulting: the stain on Putin’s record of economic stewardship, reputational damage, the financial and legal dominoes a default sets in motion and so on,” said Tim Samples

Sanctions experts have estimated that Russia has about $20 billion worth of outstanding debt that is not held in rubles.

Russia owes about $71 million in interest payments for a dollar-denominated bond that will mature in 2026. The contract has a provision to be paid in euros, British pounds and Swiss francs.

Adam M. Smith, who served as a senior sanctions official in the Obama administration’s Treasury Department, said he expected that Russia would most likely default sometime in July and that a wave of lawsuits from Russia and its investors were likely to ensue.

“The interesting question to me is, What is the policy goal here?”

“No one believed me that working for Elon was the way it was until they saw how he operated Twitter,” Bernal said, calling Twitter “just the tip of the iceberg on how he operates Tesla.”

In April 2019, at a showcase dubbed “Autonomy Investor Day,” Musk made perhaps his boldest prediction as Tesla’s chief executive. “By the middle of next year, we’ll have over a million Tesla cars on the road with full self-driving hardware,” Musk told a roomful of investors. The software updates automatically over the air, and Full Self-Driving would be so reliable, he said, the driver “could go to sleep.”

Investors were sold. The following year, Tesla’s stock price soared, making it the most valuable automaker and helping Musk become the world’s richest person

To deliver on his promise, Musk assembled a star team of engineers willing to work long hours and problem solve deep into the night. Musk would test the latest software on his own car, then he and other executives would compile “fix-it” requests for their engineers.

Those patchwork fixes gave the illusion of relentless progress but masked the lack of a coherent development strategy, former employees said. While competitors such as Alphabet-owned Waymo adopted strict testing protocols that limited where self-driving software could operate, Tesla eventually pushed Full Self-Driving out to 360,000 owners — who paid up to $15,000 to be eligible for the features — and let them activate it at their own discretion.

Tesla’s philosophy is simple: The more data (in this case driving) the artificial intelligence guiding the car is exposed to, the faster it learns. But that crude model also means there is a lighter safety net. Tesla has chosen to effectively allow the software to learn on its own, developing sensibilities akin to a brain via technology dubbed “neural nets” with fewer rules, the former employees said. While this has the potential to speed the process, it boils down to essentially a trial and error method of training.

Radar originally played a major role in the design of the Tesla vehicles and software, supplementing the cameras by offering a reality check of what was around, particularly if vision might be obscured. Tesla also used ultrasonic sensors, shorter-range devices that detect obstructions within inches of the car. (The company announced last year it was eliminating those as well.)

Even with radar, Teslas were less sophisticated than the lidar and radar-equipped cars of competitors.“One of the key advantages of lidar is that it will never fail to see a train or truck, even if it doesn’t know what it is,” said Brad Templeton, a longtime self-driving car developer and consultant who worked on Google’s self-driving car. “It knows there is an object in front and the vehicle can stop without knowing more than that.”

Toward the end of 2020, Autopilot employees turned on their computers to find in-house workplace monitoring software installed, former employees said. It monitored keystrokes and mouse clicks, and kept track of their image labeling. If the mouse did not move for a period of time, a timer started — and employees could be reprimanded, up to being fired, for periods of inactivity, the former employees said.

Some of the people who spoke with The Post said that approach has introduced risks. “I just knew that putting that software out in the streets would not be safe,” said a former Tesla Autopilot engineer who spoke on the condition of anonymity for fear of retaliation. “You can’t predict what the car’s going to do.”

Some of the people who spoke with The Post attributed Tesla’s sudden uptick in “phantom braking” reports — where the cars aggressively slow down from high speeds — to the lack of radar. The Post analyzed data from the National Highway Traffic Safety Administration to show incidences surged last year, prompting a federal regulatory investigation.

The data showed reports of “phantom braking” rose to 107 complaints over three months, compared to only 34 in the preceding 22 months. After The Post highlighted the problem in a news report, NHTSA received about 250 complaints of the issue in a two-week period. The agency opened an investigation after, it said, it received 354 complaints of the problem spanning a period of nine months.

“It’s not the sole reason they’re having [trouble] but it’s big a part of it,” said Missy Cummings, a former senior safety adviser for NHTSA, who has criticized the company’s approach and recused herself on matters related to Tesla. “The radar helped detect objects in the forward field. [For] computer vision which is rife with errors, it serves as a sensor fusion way to check if there is a problem.”

Musk, as the chief tester, also asked for frequent bug fixes to the software, requiring engineers to go in and adjust code. “Nobody comes up with a good idea while being chased by a tiger,” a former senior executive recalled an engineer on the project telling him

Musk’s resistance to suggestions led to a culture of deference, former employees said. Tesla fired employees who pushed back on his approach. The company was also pushing out so many updates to its software that in late 2021, NHTSA publicly admonished Tesla for issuing fixes without a formal recall notice.

Tesla engineers have been burning out, quitting and looking for opportunities elsewhere. Andrej Karpathy, Tesla’s director of artificial intelligence, took a months-long sabbatical last year before leaving Tesla and taking a position this year at OpenAI, the company behind language-modeling software ChatGPT.

One of the former employees said that he left for Waymo. “They weren’t really wondering if their car’s going to run the stop sign,” the engineer said. “They’re just focusing on making the whole thing achievable in the long term, as opposed to hurrying it up.”

Brad Hintz, an analyst at Sanford C. Bernstein, said that LPL’s management had done a good job expanding the company and improving its compliance technology, allowing brokers with high standards to do well. But he said the scattered nature of its offices was an Achilles’ heel that exposed the company to lawsuits and regulatory risks.

In 2006, the government issued just 802 of these EB-5 visas to investors and their families; this year, it granted 7,818. The program is now growing so rapidly that in the next year or two the number issued will probably reach the annual limit of 10,000. For the first time in the program’s history, applicants may be turned away.

Investors must put up $1 million for a visa, but if they invest in a rural area or one with high unemployment, that is reduced to $500,000.

Mr. Stenger dismissed criticism that the visa program simply allowed rich people to jump ahead of others in line for citizenship. “Yes, it’s true that the investment is getting them their green card,” Mr. Stenger said. “But to say they’re buying their way into the country — well, they’re investing in products and programs that are having a tremendously positive impact on the community.”

More seriously, the worry is that America is abandoning the economic leadership that saw it champion free markets. Here is Erik Nielsen of Unicredit, an Italian bankI don’t think we can escape the conclusion that “the free world” has lost its leader. After all, a leader needs followers, and who’ll follow someone whose guiding principle is “me first”? To define his “America first” mantra, President Trump announced “two simple rules: Buy American and hire American”, and he promised that “America will start winning again, winning like never before”. Donald Trump’s world is principle-free and transactional. Every interaction is a zero-sum game with a winner and a loser—and the US will win “like never before”. Good luck, trade negotiators from the rest of the world…

Jan Dehn of Ashmore, an emerging markets investment groupRevealing a shocking degree of economic illiteracy, US President Donald Trump claimed in his inaugural speech that protection will lead to great strength and prosperity”. His bleak, defensive and atypically American vision of pessimism and defeatism was a de facto abdication of America’s erstwhile role as undisputed global leader on economic issues. By contrast, Chinese President Xi Jinping’s message at Davos spelled out a positive and ambitious agenda of openness and support for globalisation with the words “protection is like locking yourself in a dark room”

the fact that China is aspiring to global leadership is significant. In the brief unipolar period of the 1990s, it was possible to believe that counties would aspire to the liberal democratic model. But China’s growth has been so strong that many countries may feel they can get prosperity without the messy democratic stuff. The Iraq war, the financial financial crisis of 2008 and now the election of the mercurial Mr Trump have not been great adverts for the American system.

In a splendid piece for the Financial Times, Gideon Rachman worries that:If the Trump administration now destroys American credibility, it will have handed the Russian and Chinese governments a victory of historic proportions. The cold war was a battle not just about economics or military strength, but also about the truth. The Soviet Union collapsed, in the end, partly because it was too obvious that it was a regime based on lies.

The S&P 500 trades at 16 times forecast earnings, he calculates, well above 13, the average going back to the 1970s. Since 1976, it has hardly ever surpassed 17 times forecast earnings. The main exception came during the stock bubble of the late 1990s and early 2000s.

His conclusion: Investors are overexposed to stocks, but they haven’t gone to bubblelike extremes

Projects like the Oculus Rift virtual-reality headset or the Pebble watch (both of which were Kickstarter successes that went on to become big independent businesses; the former was acquired last year by Facebook for $2 billion) course with a special energy that derives from the exchange of far-flung resources among the sympathetic and like-minded. The realized object takes on a kind of totemic significance through the aspirations and the values of the community that brought it into being

Until last October, Kickstarter’s terms of use stipulated that project creators had only two options to discharge their obligations: ship or refund

Today, in response to situations like ZPM’s, creators can refund, ship or explain, and if a full audit — financial or narrative — shows that the creators have made “every reasonable effort” toward a decent outcome, the backers are encouraged to feel satisfied. Strickler told me he feels it undermines the whole concept of crowdfunding to guarantee that products will be delivered or that refund money will be held in escrow; the acceptance of some risk, after all, is an integral part of patronage

Ethan Mollick, who has published several papers on crowdfunding, has found that more than 80 percent of hardware projects ship with significant delays. Most of those do ultimately deliver something, but Mollick has found that 14 percent of the projects studied have, since 2012, shipped either nothing at all or something too shoddy to use

If backers lack an absolute right to a product, and their legal options are limited, the policy only heightens their feeling of entitlement to full disclosure. “I long ago gave up on getting a machine, but I want my $250 of information,”

A chief tenet of the Internet age is belief in the natural proliferation of democracy and decentralization, in the ability of distributed networks of everyday people to achieve what once required top-down hierarchies and a great concentration of power. When you contribute to a Kickstarter campaign that funds an album or a documentary, you’re participating in the creation of cultural value outside the risk-averse bureaucracies of mass cultural production. You’re kicking in to cut out the middlemen of music labels or Hollywood studios.

it wasn’t until 2010, when the founders were faced with an iPhone tripod proposal, that they had to decide if such commercial projects qualified as “creative” in the way they intended. As Strickler remembers it, the tripod’s creators responded that their particular tools happened to be injection molding and AutoCAD software, but that their enterprise was absolutely in the spirit of the platform. Kickstarter agreed to host the project, but that decision inspired a sustained effort to shape best practices for gadget campaigns. Its new rules included a requirement that there be a working prototype, and a prohibition on fancy computer renderings

At the same time, like all 21st-century consumers, Kickstarter backers have been trained to expect a world custom-engineered for total frictionlessness. Everything is supposed to work easily, right away and well. O

manufacturing remains a supremely difficult process, the success of which continues to rely on marshaling a lot of resources: development money, an extensive network of trusted vendors, the dedicated personnel to sit in conference rooms in concrete campuses in Shenzhen and Dongguan and refuse to budge until the product is streaming off the assembly line in the right amounts, at the right quality and at the agreed-upon price.

the advice became overwhelming. “They’re doing it on their own schedule, nights and weekends, taking up a huge amount of Igor’s time when he’s got a ton of work to do,” she said. “People got insulted because they couldn’t be involved as much as they wanted.”

The ongoing calls for transparency put pressure on ZPM to carry on all of its business in public, but transparency and efficacy can be incommensurable ideals. ZPM couldn’t blame its vendors in updates, even for the mistakes they were consistently making, if the company wanted to keep working with them — or with anyone at all. The backers had a hard time understanding this; they continued to operate under the shared assumption that more demo­cracy, more engagement and more transparency lead inexorably to more success.

ZPM also could not publish a full financial audit, because open books make meaningful cost negotiation impossible. “I just can’t publish our financials, our cost breakdown,” Tambasco said. “If I do that then when I go to get this thing made, then everybody knows how much I have in the bank. Then what they’re going to do is just drain that money.”Which is exactly what happened.

When one of those consultants demanded, in the spring of 2014, that the project act like a “real start-up” and go into what people in Silicon Valley often call “stealth mode,” the updates came to an abrupt halt. The founders hoped that by posting their email addresses and phone numbers, and offering to field queries and complaints in person, they might assuage the backer community, but this plan, in hindsight, seemed misbegotten. It only confirmed for the backers that their one plank of accountability — the public nature of the story on offer — had been withdrawn.

the reality of ZPM’s failure was pretty banal: The founders were naïve and inexperienced, well intentioned but clumsy, and they serially trusted and paid the wrong people for ineffective help.

The backers suspected that Polyakov would try to sell the intellectual property and pocket the proceeds, but in fact Polyakov’s total asking price for the company was $35,000 to settle the founders’ legal and professional debts, equity consideration for their angel investors and, most important, a guarantee that Buckman would honor ZPM’s commitment to its backers.

the companies in which people most want to invest, technology stars like Facebook and Twitter, are managing to avoid the public markets entirely by raising hundreds of millions or even billions of dollars privately. You and I can’t buy into these companies; only very select institutions and well-connected individuals can. And companies prefer it that way.

A private company’s stock isn’t affected by the unpredictable waves of the stock market as a whole. Its chief executive can concentrate on running the company rather than answering endless questions from investors, analysts and the press.

That burden comes largely from the Securities and Exchange Commission, which was created in the wake of the 1929 stock-market crash to protect small investors. But if the move to private markets continues, small investors aren’t going to need much protection any more: they’ll be able to invest in only a relative handful of companies anyway.

Only the biggest and oldest companies are happy being listed on public markets today. As a result, the stock market as a whole increasingly fails to reflect the vibrancy and heterogeneity of the broader economy. To invest in younger, smaller companies, you increasingly need to be a member of the ultra-rich elite.

At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years.

exacerbated by what the tariffs symbolize for Mr. Trump’s agenda and the broader global economy.

By following his nationalist instincts Mr. Trump has broken with the pro-business factions in his administration and his party whose policy priorities have been critical to the upswing in business and investor sentiment since he was elected. By willingly hurting U.S. allies over a problem of overcapacity that is mainly China’s doing, he’s cast further uncertainty over the U.S. role as global leader.

With investors already on edge about Federal Reserve interest rate increases, the steel tariffs at the margin compound inflation pressure. That effect is so far too small to alter the Fed’s calculus, but a tit-for-tat cycle of retaliation could lead to even more inflation and rate increases than investors or the Fed have anticipated.

Protectionism shrinks markets, raises costs, and reduces how fast a country can grow without generating inflation. U.S. steel and aluminum companies can meet the demand previously filled by imports, but with unemployment at a 17-year low that may require hiring workers away from other industries, putting upward pressure on wages.

This is good news in the short run for workers, but bad news for any consumer who must now pay more for cars or beer cans.

nvestors speculated that the angry reaction of American allies, in particular the European Union, showed U.S. global leadership is fading and with it the dollar’s appeal as a reserve currency.

China may move more quickly to curb its overcapacity, the root of the import surge and price pressure that is hurting U.S. producers. Yet the decision has generated conflict within his own administration, his party and with key U.S. allies that, at least at the margin, counteracts the boost from the rest of his agenda.

A new study by finance professors Aleksandar Andonov of Erasmus University Rotterdam and Joshua Rauh of Stanford University looks at expected returns among more than 230 public pension plans with more than $2.8 trillion in combined assets.

For their portfolios, generally consisting of cash, U.S. and international bonds and stocks, real estate, hedge funds and private-equity or buyout funds, these pension plans report that they will earn an average of 7.6% annually over the long term. (That’s 4.8% after their estimates of inflation.) These funds often define “long term” as between 10 and 30 years.

Based on how they divvy up their money, how much are these pension funds assuming specific assets will earn?

They expect cash to return an average of 3.2% annually over the long run; bonds, 4.9%; such “real assets” as commodities and real estate, 7.7%; hedge funds, 6.9%; publicly traded stocks, 8.7%; private-equity funds, 10.3%.

consider bonds. The simplest reliable indicator of how much you will earn from a portfolio of bonds in the future is their yield to maturity in the present. With 10-year Treasurys yielding 2.6% and investment-grade corporate bonds averaging under 3.7%, it would take a near-miracle today to get anything close to 4% out of a high-quality fixed-income portfolio.

That’s below the U.S. average of 10.2% annually over the past 90 years. But stocks were far cheaper over most of that period than they are today, so their returns were naturally higher.

stocks aren’t likely to earn more than an average of 5.9% annually over the long run from today’s lofty prices.

Among those, the least implausible scenario is higher inflation. So the pension funds could hit their 8.7% stock return that way — but such a surge in the cost of living would crimp their bond returns. What they would gain on their stocks they would lose on their bonds.

the new study of estimated returns finds that the older a pension fund’s holdings of private equity are, the more likely its officials are to extrapolate those returns — as if the good times of the early 2000s, when deals abounded and buyouts were cheaper, were still rolling.

Why do expectations among pension plans run so high? Because they have to, the chief investment officer of a large public pension plan tells me. State laws guarantee generous retirement benefits for millions of current and former government employees. To appear as if they can meet those obligations, the pension plans have no choice but to set their expected returns higher than reality is likely to deliver.

That’s the exact opposite of what the rest of us should do. Sooner or later, investors who build their expectations on hope rather than on arithmetic end up sorry.

What, after all, is the main alternative to investing in stocks? Buying bonds. Yet these days bonds offer incredibly low returns. The interest rate on 10-year U.S. government bonds is only 0.6 percent

So buying stock in companies that are still profitable despite the Covid-19 recession looks pretty attractive.

And why are interest rates so low? Because the bond market expects the economy to be depressed for years to come, and believes that the Federal Reserve will continue pursuing easy-money policies for the foreseeable future

for a few weeks in March the world teetered on the edge of a 2008-type financial crisis, which caused investors to flee everything with the slightest hint of risk.

That crisis was, however, averted thanks to extremely aggressive actions by the Fed, which stepped in to buy an unprecedented volume and range of assets.

But back to the disconnect between stocks and economic reality. It turns out that this is a long-term phenomenon, dating back at least to the mid-2000s.

Think about all the negative things we’ve learned about the modern economy since, say, 2007. We’ve learned that advanced economies are much less stable, much more subject to periodic crises, than almost anyone believed possible.

Productivity growth has slumped, showing that the information technology-fueled boom of the 1990s and early 2000s was a one-shot affair. Overall economic performance has been much worse than most observers expected around 15 years ago.

Stocks, however, have done very well. On the eve of the Covid crisis, the ratio of market capitalization to G.D.P. — Warren Buffett’s favorite measure — was well above its 2007 level, and a bit higher than its peak during the dot-com bubble. Why?

The main answer, surely, is to consider the alternative. While employment eventually recovered from the Great Recession, that recovery was achieved only thanks to historically low interest rates. The need for low rates was an indication of underlying economic weakness: businesses seemed reluctant to invest despite high profits, often preferring to buy back their own stock. But low rates were good for stock prices.

None of this should be taken as a statement that current market valuations are exactly right. My gut sense is that investors are too eager to seize on good news; but the truth is that I have no idea where the market is headed.

The point, instead, is that the market’s resilience does, in fact, make some sense despite the terrible economic new

North America’s oilfield services sector, which producers rely on to drill new wells, has been decimated, he said.“They’re decapitated from being able to grow,” Tahmazian said. “The supply side is broken.”

The pace of output recovery in the United States, the world’s No. 1 oil producer, is forecast to be slow and will not top its 2019 record of 12.25 million barrels per day (bpd) until 2023.

Exxon yesterday posted its own detailed slide deck laying out the case for why its strategy will provide long-term value.It's the latest of recent moves including new board additions and vowing new emissions intensity cuts.

BlackRock’s actual policy changes are modest compared with Fink’s rhetoric. At least at first, the main change will be to rid the firm’s actively managed portfolio (about $1.8 trillion in value) of coal stocks; but coal, though still a major contributor to climate change, is already on the wane, except in Asia.

So an investor swearing off coal is a bit like cutting cake out of your diet but clinging to a slice of pie and a box of doughnuts.

the science shows that fracking for natural gas releases large amounts of methane, the second-most significant contributor to climate change.

“As trillions of dollars shift to millennials over the next few decades, as they become C.E.O.s and C.I.O.s, as they become the policymakers and heads of state, they will further reshape the world’s approach to sustainability.”

“The U.S. requires testing of six to 10 million people per day to contain and monitor the infection,” Fluidigm CEO Chris Linthwaite says.

Fresh options can help. Food and Drug Administration regulators last week authorized a new test by Abbott for emergency use that can yield results in as little as 15 minutes. Regulators also authorized a new test developed by Fluidigm that uses saliva rather than a nasal swab. The clinical study associated with Fluidigm’s submission to the FDA demonstrated 100% agreement between the saliva results and paired nasopharyngeal samples. Fluidigm’s test returns results in several hours. Meanwhile, OraSure Technologies is developing a nasal-swab test that is potentially suitable for at-home use and could be ready this fall.