A Special Government Employee (SGE) can work no more than 130 days during any consecutive 365-day period.
They’re allowed to maintain private-sector jobs or other roles.
They are subject to federal ethics rules, but with some exceptions or leniencies given the part-time nature of their service.
They can be paid.
Elon Musk is a SGE.
He won’t be paid though.
https://www.law.cornell.edu/uscode/text/18/202
Found another closing discrepancy in reported numbers.
These were the reported numbers for fixed asset investments (excl. rural) between 2020 and 2024.
The 2023 number has the biggest difference. If you directly compare 503,036 and 572,138, that’s dropping -12% yoy. Yet, the reported yoy was +3%.
This resulted in a 15% gap in yoy percentage number for 2023.
That gap has been shrinking to less than 1% in 2024, with +3.2% reported for 2024 fixed investments, compared with +2.3% in calculated comparison.
In 2024, the investment in the water conservancy management industry increased by 41.7%, investment in the air transportation industry increased by 20.7%, and investment in the railway transportation industry increased by 13.5%.
Those are some big % numbers. If you compare some headline numbers, e.g. water conservancy, the growth should be 13%, rather than 42%.
Maybe 2023 was indeed a lower base than reported.
Anyways, the picture in 2024 indeed looks better.
One thing is certain – US is trying to fight its trade deficits.
Who would be relatively safe from Trump’s tariff threat?
Countries that US runs a trade surplus!
Any examples? Brazil.
If a company wants to relocate its production, Brazil would be a top destination due to the trade surplus US enjoys, which means tariff threat is lower.
Plus, Brail has a big population with a relatively lower labor costs vs other countries like Australia, UK, or Singapore (US runs a trade surplus to those countries as well).
If you look at 2023 vs 2022 export data, you will find China’s export to Russia surged by almost 50% in USD terms.
Meanwhile, EU and US bought less from China in 2023 vs 2022 – China’s export to EU and US dropped by double digit.
In 2024, that trend is gone.
In USD terms, China’s export to Russia, US, and EU all rose by 3-5% in 2024 vs 2023.
If there is one thing we should learn from China’s equity market in the past few years, it’s to be greedy when other are fearful.
China’s equity, on the index level, dropped double-digit for 3 consecutive years from 2021 to 2023. The table below summarizes the performance of MCHI, the ETF that tracks MSCI China Index.
Some of the headwinds China had were structural. So you can’t expect a quick turn around.
But when things do turn, and when valuation is very reasonable, it’s hard to ignore.
Now the question is, with a few weeks of correction, has the US stock market become attractive enough? Are most market participants fearful?
Source: yardeni
We better ask Buffett if he still suggests buying S&P 500 at this valuation.
Tariff is not an unknown factor.
Trump talked a lot about tariff during campaign and after election.
However, stock market was buoyant until recently.
The most common excuse? Investors thought tariff is just an negotiation tool that won’t be implemented.
That sounds reasonable, but actually it doesn’t make any sense.
Let me explain.
If stock market reflects the common wisdom and it doesn’t go down, then it means everyone assumes tariff threat is not that real.
Then why should the negotiation be effective?
Governments are not fools. Like in poker, if they think Trump is just bluffing, they would call.
The stock market almost sells Trump out if it doesn’t fall.
So, if US wants to be considered serious on the negotiation table, stock market must fall.
Why?
Because you need to let everyone know tariff is real. Every company needs to talk about it. Investors need to be panicking about it. When investors are really worried, they sell, even with losses.
Stock market drop is a manifesto that everybody realizes the tariff can be as real as the losses in their retirement accounts.
That’s when the “negotiation tool” is effective.
Nvidia GPUs can be used as collateral to borrow. Financial Times reported that $11 billion of loan was created for these chips.
That’s something too creative for me.
I think it’s generally safe to borrow against assets with a growing value.
Chips, however, are like cars to me, depreciating… with new versions better than the previous one.
Well, it seems you can borrow against your car, but that’s still based on your ability to pay back the loan.
So how does it work?
Maybe it’s actually a loan borrowed against the “service contract” or rental agreement carried by the chips, which makes it more like an asset with “yield”.
But still, this market sounds a bit too arbitrary…
Hard to imagine that the rental income will be stable or rising, as Nvidia chips supply is up to Nvidia and TSMC. That capacity can increase over time.
Assuming buybacks & dividends are “required”, the unallocated cash flows are matching the capex figure already.
This means additional room to add capex is limited.
Put it in another way, free cash flows after shareholder returns are near 0.
For example, Alphabet got $125bn op. cash flow in 2024, paid $53bn in capex, $62bn in buyback and $7bn in dividend. FCF after shareholder returns is only $3bn, or 2.5% of its operating cash flow.
Meta, with 10% unallocated operating cash flow in 2024, will increase its capex by 50% in 2025. If Meta’s op. cash flow grows 10% in 2025, then FCF after shareholder returns in 2025 is only $3bn, or 3% of its operating cash flow.
Microsoft in calendar year 2024, has $10 billion of unallocated free cash flow. But that should be smaller if looking at its fiscal year 2024.
Berkshire paid the most corporate income tax in the US, or about “5% of what all of corporate America paid”.
Buffett complained a bit about US fiscal recklessness and the inability of fixed income securities to protect buying power.
Buffett still prefers equity – but he didn’t say public equity!
“P/C insurance growth is dependent on increased economic risk. No risk – no need for insurance. ”
Berkshire borrowed “fixed” rate in yen! How beautiful the transactions were. But if Japan’s interest rate were to rise significantly in the future (when Berkshire needs to refinance), will Berkshire find those Japanese dividend less attractive?
Wage increases due to inflation and negotiation reduced BNSF earnings, in a degree more than Buffett expected. Revenues also fell.
Buffett increased holdings in Japan’s “conglomerates” – these companies are diversified, repurchasing their shares, receiving lower wages at C-level, and reluctant to issue shares. Those purchases began in 2019.
There were some problems with BHE – no fixed return as a utility, and with rising climate change induced problems.
Stick with wonderful businesses! “Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.”