That’s a quote from a New York Times article profiling E.J. Antoni, Trump’s pick to head the Bureau of Labor Statistics after he fired the former chief, Erika McEntarfer, a highly respected economist with decades of experience dealing with national economic data. McEntarfer’s “offense,” if that’s the right word, was apparently to ok the release of a monthly jobs report that shows that hiring is slowing.

Hard to believe that a hiring pause should come as a shock–and I can identify only one person who seems to have been shocked–given uncertainty about tariffs (the consensus is that they will clip about half a percentage point off economic growth, basically flatlining the economy) and efforts by ICE to shrink the labor force either through deportation or arrest or intimidation of potential workers.

What really strikes me is both the number of prominent economists who are speaking out against this move and the force they’re doing this. No mincing words, no subtle academic euphemisms …just flat out he doesn’t have the skills and there’s a good chance he’d doctor the figures, if asked. In almost a half-century of involvement in US financial markets, I can’t recall anything remotely like the bluntness of this disapproval.

In simple terms (the ones I like best), I think the worry being expressed is that shoot the messenger is a substantial step beyond the bounds of what’s acceptable. They put on the table the hitherto unthinkable possibility that one day a good chunk of the country’s economic books are being cooked (sort of like Greece in the early days of the euro), and the bond market, realizing this, will demand higher interest rates for taking this extra risk. That, of course, would make the economy’s fiscal problems a lot worse. Not great for the currency, either.

This isn’t necessarily a today issue, but the idea that this is now thinkable is, I think, why professional economists are speaking out forcefully against the administration’s apparent plans for the BLS.

Nvidia and AMD have just agreed to pay a tax of 15% of revenue on sales of advanced semiconductors to China. This is in return for Washington lifting a ban on such sales. Today, Treasury Secretary Bessent has suggested that this form of tax could reasonably be applied to other US-based industries.

In the here and now, this deal makes sense for all parties. The NVDA writedown of the production cost of the chips in question, once their sale to China was barred, was $4.5 billion. If we assume the average NVDA markup of 4x, the lost revenue was $22.5 billion and the lost operating profit was $17 billion.

Assume the chips, now a generation or more old, would sell for half that today– say, $12 billion. A 15% tax on revenues to Washington would be $1.8 billion. So, if they haven’t already been sold elsewhere, NVDA would gain around $10 billion, its production cost plus $5.5 billion in one-time profit. This isn’t $17 billion, but it’s not nothing. So it’s understandable in this particular case, where the chips are already made, paid for and in inventory, why NVDA would happily agree to this. (We can imagine other possible, but unlikely, I think, cases, where, say, NVDA has already sold the banned chips elsewhere and has to order fresh chips from TSMC, but let’s not worry about these.)

The main point I see for NVDA is that if it were to relocate to, say, Vancouver, it would retain China and its $100 billion+ annual revenue stream as a customer, without having to worry about future halts on sales or export tariffs of $15 billion.

At the very least, the actuality of export tariffs would diminish the attractiveness of the US as a manufacturing base for exports to the rest of the world. Couple that with the ICE efforts to shrink the domestic workforce, and it’s hard for me to see how we’re making the economy stronger. I still think the right portfolio posture is to have foreign sales and domestic costs, but it may now be that, until the economic policy picture becomes clearer, that companies with intangible assets will fare better than those with tangible.

I’m a big fan of Nobel Prize winner, economist Paul Krugman. Today he wrote about President Trump’s firing the (now former) head of the Bureau of Labor Statistics–for presenting the most recent monthly labor situation report.

The report itself was by no means a surprise. It showed that in a time of great uncertainty–on-again, off-again tariff declarations of sometimes high, sometimes higher, sometimes lower levies–employers were hesitating about hiring and employees were hesitating to take the risk of taking a new job. This shouldn’t have come as a shock to Mr. Trump, either. After all, he saw 48 of these during his first term. And, of course, he’s a graduate of the prestigious Wharton business school. It also appears to have surprised him that the long-standing procedure is for data to be collected over a three-month period, with two preliminary monthly reports followed by a final one. In any event, Trump shot the messenger.

This itself isn’t Mr. Krugman’s gripe. He seems to think that if the replacement will simply find a way to deliver the kind of numbers Trump wants, whether they’re reality-based or not.

If so, I think this would sooner or later be bad news for the Treasury bond market. Logically speaking, one might think that foreign holders of US government debt would be the first to be spooked by an administration effort to produce deeply flawed reports on the economy (and therefore on the country’s ability to repay government borrowings on time and in full). As I read history, though, it’s big US-based holders who are the first to abandon ship.

I’m not sure there’s a reading of this situation that’s good for Treasuries, since fudging the employment numbers seem to me to shift the burden of proof for all government reports from having to prove that a particular set of books are cooked to having to establish they’re not . For stocks, on the other hand, I think the winning formula is pretty much the same–foreign revenues and US costs. For down-and-out “value” stocks, though, one may have to hope for a foreign acquirer to step in, rather than a domestic rival.

President Trump has just signed a bill that allows corporate pension plans to offer private equity products that individuals can purchase in their IRAs and 401ks. This comes at the same time as his attacks on universities appear to be causing them to become sellers of long-held private equity investments. Is there a connection? My guess is no. My surmise is that, if anything, connecting the dots that his stamp of approval on private equity purchases for you and me will reduce some pressure on education institutions would have meant he’d refuse to sign.

Private equity itself is a pretty broad term, though.

In its most basic sense, it means an ownership interest in an entity controlled by holders of common stock —and which is not publicly traded. Yes, being publicly traded makes it easier to raise capital and to compensate employees through stock options. But going public also requires that the company’s financials aren’t terrible, and that the management controls and financial statements meet a relatively high level of sophistication and accuracy. So an early stage company, or one that has steady cash flow but not a lot of near-term earnings growth sizzle, or one that needs money now to expand may find that a private placement of stock today suits its needs better than starting the process of going public, say, next year.

At the same time, it was one of the key insights of the Yale economics department in the 1970s that university endowments like theirs were natural buyers of such private stock sales. That’s because the yearly calls on their accumulated wealth were tiny, so they had no real need for near-term liquidity. This meant they could take a much longer term view in their stock purchases than the typical mutual fund, whose manager might be fired after two bad years. So both the endowment and the company raising money could arrive at a much better deal for each by agreeing to a private transaction with one another.

This worked well for decades, and was widely imitated.

Traditional pension funds, now mostly the province of government entities, have also found that private equity has allure. State-run pension funds for municipal employees (I’m not an expert here, though) are, as far as I can see, seldom fully funded. Imagine a wicked bear market comes along–think, COVID or 2007 financial crisis. Publicly-traded stocks drop through the floor. Bonds don’t do so well, either. So the underfunding that was already there looks a lot worse. Maybe the state has to raise taxes to put more money into the plan to make it solvent again. A political nightmare! But although Mr. Market rules the valuation of the S&P and NASDAQ, one could argue that private equity holdings are relatively undamaged in a situation like this. At the very least, there’s no evidence from public trading that they’ve lost any value–because there’s no public trading. No wonder state pension plans tend to have healthy doses of private equity.

Why, then, introduce private equity to individual IRAs and 401ks?

The obvious answer, I think, is that the traditional markets for private equity are saturated.

An aside: Early in my career, I was at an analyst conference for a big hotel company. The company, which had traditionally focused on big metropolitan hotels, was starting to open smaller hotels in industrial parks, and motels for the first time, too. How so? …the iron rule of marketing, the VP of marketing said: you don’t start selling chocolate ice cream until the market for vanilla is saturated. In other words, the act of selling chocolate itself reveals everything you need to know.

In the private equity case, we’re down to either strawberry or cookies and cream, whichever is #3.

Given what the Ice Cream Rule says the present situation is, I wonder if plan sponsors are going to risk offering private equity alternatives to their pension fund clients.

August is usually a nothing month for the stock market.

Part of this is (ancient) history.

A generation ago, when heavy industry dominated the major market indices, the northern hemisphere summer was vacation time. Europe, which was much more economically important than today, pretty much shut down and headed for the beaches. The US did the same, if less vigorously. With both workers and customers away, this meant August was a time for repair and maintenance and running down inventories, rather than all-out production of new stuff.

The big financial firms shifted into lower gear, as well, with top managements heading for their summer homes on Long Island. Some managers, like me, worked remotely anyway, on the idea that the month was prone to quirky up and down movements. But by and large decision-makers make it clear that they don’t want to be disturbed.

Two things strike me as unusual, though:

–the dollar appears to be stabilizing, and, if anything, rising a bit, and

–the domestic stock market is continuing to chug along, outpacing EAFE for the first time this year. Given that the domestic-economy-oriented Russell 2000 mid-cap index continues to flatline, investors seem to continue to be emphasizing multinationals and avoiding firms with $US revenues.

The ride almost always turns bumpy in mid-September, as mutual funds begin to do their annual tax planning. Given the popularity of ETFs, I wonder if the traditional pattern of selling in late September–early October, followed by a significant rally in the runup to Halloween, will still be evident. Not a today worry, though.