In partnership with | | | | | | That's the cost of a hot dog at Davos |
|
|
|
| | | Davos and the reordering of power Will Trump's housing and credit card plans actually lower costs? Newsletter Exclusive: Smartphone addiction is creating its own market
|
|
| | Davos 2026: Alliances Shift, Markets React, Leaders Clash | The World Economic Forum (WEF) convened in Davos last week. It forced a reckoning of geopolitical alliances, moved markets, and generated a fair share of gossip. | President Trump made a splash by referring to Greenland as Iceland four times in his address to the forum, and later for TACO-ing on his threats of using force and punitive tariffs to acquire the Danish territory. | Commerce Secretary Howard Lutnick did his part to provoke American allies by declaring in a speech: "With President Trump, capitalism has a new sheriff in town." He was reportedly booed, and Christine Lagarde, the president of the European Central Bank, walked out of the room. | U.S. markets fell and Treasury yields rose on Tuesday on fears that Trump's erraticism would bring the "Sell America" trade back. | | | But, like Trump, the "Sell America" investors mostly chickened out; the S&P 500 closed slightly up, and the 10-year Treasury ended the week where it started. | The undisputed winner of Davos was Mark Carney, Canada's prime minister. He delivered a moving speech about the end of American hegemony and the need for new alliances: "The middle powers must act together because if we're not at the table, we're on the menu." The address was met with the third standing ovation in WEF history (the other two being Nelson Mandela and Ukrainian President Volodymyr Zelenskyy). | |
| | |
| | | | I was at Davos in 1999. What's the difference between then and now? | In 1999, it was all about the internet, and President Clinton gave a speech about cooperation, competition, and consumerism. Now it's about AI, and the president gave a speech about chaos and coercion and corruption. The tone and the vibe of 1999 was more optimistic. Now everyone's sort of like, I hope it doesn't get worse. | Another observation from this year: Europe remains fragmented; it lacks a unified voice. Who speaks for the EU? Macron with his aviators? Lagarde? Perhaps it should be Carney. Without coordination, these nations can't command the space they should occupy. In aggregate, they'd be the world's second-largest economy. Instead they're a collection of midtier economies. | The main difference between Europe and the U.S. is our capital markets. The CEO of Anthropic was at Davos and said they're closing on a new funding round at a $350 billion valuation. There are only two companies in Europe worth at least $350 billion, LVMH and ASML, and they've been around for nearly 40 years. Anthropic was founded only five years ago. Europe has amazing entrepreneurs and IP, but it doesn't have the heft of the U.S. capital markets. |
| |
| | |
| | | | We continue to send our allies into our adversaries' arms, pitting the rest of the world against America. Canada and China just struck a new trade deal. The U.K. is preparing a new deal with China. The EU and India are finalizing what Ursula von der Leyen calls "the mother of all deals." The EU announced a deal with South America's Mercosur. Deals are happening — just not with us. |
| |
| | |
| | | | We've been hearing about the Sell America trade for months, and so far the opposite has happened. Foreign holdings of U.S. Treasurys hit record highs in November 2025. The only country that has continued to actually sell American debt is China, and they started doing that in 2017. | Macron has been praised for referring to Trump as a bully, and Mark Carney said that the world is "in the midst of a rupture, not a transition" — but you wouldn't know from their countries' actions. Over the past year, Canada and France have increased their holdings of U.S. Treasurys by $100 billion and $44 billion, respectively. | It's also just not realistic that Europe will "dump" its holdings of U.S. assets. Most stocks and bonds are held by private pension funds, insurers, and asset managers in Europe—not governments—meaning they can't just be ordered to sell. | |
| |
| | |
| Trump's Two Affordability Bets: Housing and Credit Cards | President Trump used his Davos address to highlight two of his highest-profile affordability proposals: | | The proposals drew mixed reactions from Wall Street. JPMorgan CEO Jamie Dimon called a 10% credit card rate cap an "economic disaster." However, Citi and Bank of America are reportedly exploring cards priced at or near 10%, a sharp drop from current average rates above 20%. | Trump initially asked banks to voluntarily cut rates, setting January 20 as a deadline for issuers to lower interest rates to 10% for one year. After banks changed nothing, Trump shifted to urging Congress to pass legislation mandating the cap. | Meanwhile, Trump's housing proposal inched closer to policy last week. On Tuesday, Trump issued an executive order instructing the Justice Department and the Federal Trade Commission to examine whether large investors' housing purchases are anticompetitive. | The order stated that in 30 days, Treasury Secretary Scott Bessent will define what qualifies as a "large institutional investor" and a "single-family home," and direct federal agencies to codify a specific policy. | Even if both proposals were implemented, would they change anything? | Housing | Economists are skeptical that a ban on institutional ownership would meaningfully improve affordability. Institutional investors own only about 2% of the single-family rental market nationally, and banning them from buying more wouldn't solve the underlying problem: supply. | | Credit Cards | President Trump cited credit card debt as one of the "biggest barriers" to saving for a down payment. He's right that it's a problem — nearly half of Americans (47%) carry credit card debt, and 22% don't think they'll ever pay it off. | Research from Vanderbilt University found that if rates were capped at 10%, consumers could save $100 billion per year, or $899 per person. However, that would also mean banks might start refusing credit to people with lower credit scores. | The same study concluded that a 15% cap would save consumers $48 billion annually without requiring any business model adjustments or affecting lending volumes. | Trump's credit card proposals face a long and uncertain legislative path. Congress has already reintroduced a bill to cap interest rates at 10%, but it lost momentum in the House of Representatives. Though it has some bipartisan support, it's up against hardcore republicans and $50 million in lobbying from the banking industry. |
|
| | | | The American public isn't happy. Trump currently has the worst approval rating of any second-term president in history except for Nixon. And among Gen Z, his net approval rating has dropped 42 points from where it was in February last year. | From TACO to Powell, Trump seems to be unraveling. That would explain all these new affordability proposals. He's trying to reverse the damage he's already done. | |
| |
| | |
| | ____________sponsored content ____________ |
|
| Keep Your SSN Off The Dark Web | Every day, data brokers profit from your sensitive info—phone number, DOB, SSN—selling it to the highest bidder. What happens then? | Best case: companies target you with ads. | Worst case: scammers and identity thieves breach those brokers, leaving your data vulnerable or on the dark web. | It's time you check out Incogni. It scrubs your personal data from the web, confronting the world's data brokers on your behalf. And unlike other services, Incogni helps remove your sensitive information from all broker types, including those tricky People Search Sites | Help protect yourself from identity theft, scam calls, and health insurers raising your rates. | Plus, just for PROF G MARKETS readers: Get 55% off Incogni using code PROFG |
|
| ____________sponsored content ____________ |
|
| | | Selling the Antidote | American Gen Zers, (those between the ages of 13 and 29) will spend almost 18 years — or more than 20% of their entire lives — on their phones. | That's the future if nothing changes. But the phone addiction economy is already generating its own resistance. | More than half of Gen Z (54%) now set aside dedicated offline periods each day, compared with 43% of millennials, 33% of Gen X, and 22% of baby boomers. | Sixty-nine percent of Gen Z believe their social life would improve with less phone time, and 72% of Gen Z think their mental health would improve if apps were less addictive. | They're right. A recent study found that people who cut back on smartphone use felt noticeably better than those who didn't, reporting fewer symptoms of depression, less stress, and better sleep. | The kids that were guinea pigs for smartphones have become the young adults most eager to put them down. | But smartphone addiction afflicts everyone: | Americans check their phones 186 times per day. Eighty five percent check their phone within 10 minutes of waking. Sixty eight percent use their phone on the toilet.
| | However, pixels are more powerful than self-control. Smartphone apps are literally built to be addictive, and humans aren't great at following through on "should-dos" in the first place. After all, 80% of people fail to keep their New Year's resolutions by February. | But capitalism and human ingenuity created this problem, and the same forces are coming to the rescue now with solutions. | RaaS: Restriction as a Service | A new category of startups have emerged with the goal of limiting smartphone usage. They loosely fall into two categories: physical blockers/devices and "dumb" phones. | | Yondr is a lockable fabric pouch system that allows people to keep their phones on them, but prevents use until they tap the pouch at an unlocking base. The company works with 2.5 million kids across all 50 U.S. states and in 48 countries worldwide. | | Brick is a small, 3D printed magnet that pairs with an app to act as a physical "lock" on your phone. It costs $60 and is pitched as a behavioral nudge — when you activate it, Brick blocks selected apps until you physically tap your phone back onto the device to unlock. | | Tin Can is basically a Wi-Fi "landline for kids" that lets users call friends and relatives without a smartphone. Launched in 2024, the $75 product (plus $9.99 monthly phone plan) saw call volume spike more than 100x on Christmas Day 2025. | "dumb" phones | | Light Phone, Gabb Wireless, and Pinwheel all offer minimalist phones focused on calls and texts, with no social media or web browser. | The Learning | Successful categories often create their own counter markets. This pattern underlies some of the most prominent industries: | Big banks' lack of innovation and stodgy complexity led to the emergence of fintechs that simplified and digitized banking and investing. | Fast fashion trained consumers to treat clothing as disposable. The backlash created a resale and thrift-shopping boom based on sustainability and taste. | Addictive short-form video maximized dopamine with instant and forgettable content. The saturation created demand for longer-form stories (perhaps why Gen Alpha loves movie theaters). | In other words, when a product becomes ubiquitous, it creates second-order opportunities. | In this case, social media promised connection but delivered a loneliness epidemic. The more social life moved online, the more valuable real-world community became. Smartphones made life frictionless and attention impossible, and now we crave friction: dumb phones, app blockers, and lock pouches. | Skate to Where the Puck Is Going | The fight against smartphone addiction has trickled down into a growing disdain for AI and AI-created content. This too has commercial implications. | You could say that the organic label has a whole new raison d'être. What was once only a supermarket designation could become a designation of human origin. (Sidenote: That's an interesting startup opportunity.) | Humans want human content, and companies are betting we'll pay for it. | iHeartRadio and Bandcamp both banned AI-generated music. DC Comics announced it would not support AI-generated storytelling or art. Lingerie brand Aerie's promise not to use AI in its ads was its most popular Instagram post last year. Porsche received an outpouring of support for its human-generated holiday advertisement.
| | (Because there is not yet an industry standard organic/human classification, we'll self-designate: No AI was used in the writing of this article.) | You can make phones dumb or lock them in a pouch, but it's harder to do that with superintelligence. | Instead of creating new business opportunities, perhaps AI resistance will increase our appreciation for human-centered businesses and art that have been here all along. Hand-drawn animations, painstakingly-composed songs, sentences that took hours to write. It almost seems naive to be that hopeful, but right now it looks like that's where the puck is going. |
|
| | | The U.S. is gonna strike Iran imminently. Trump loves the flex and the recognition he earned from his actions in Venezuela. Also, Niall Ferguson said that if there aren't military strikes from the U.S., he put the likelihood that the regime stands at 90%. It just infuriates me that no one seems to give a sh*t about Iran in the U.S. when it has been one of the most oppressive, misogynistic regimes of the last century. |
| | |
| | On this episode of China Decode, Alice Han and James Kynge unpack Beijing's bid to draw U.S. allies closer — and what it means for markets and geopolitics. Plus, a viral "are you still alive?" app reveals a darker story about loneliness inside China. |
| | |
| | | Like my new blouse? Thanks, it's AI South Korea's stock market is up nearly 100% in the last year. Why? Popular music is getting sadder and angstier
|
| | |
| | | |
|
No comments:
Post a Comment