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It’s tough to miss the irony.

The Trump administration’s recent decision to acquire a stake in Intel (see image, source: Intel’s press release on Aug 22, 2025), with unconfirmed reports of similar moves ahead in U.S. defence contractors, has many in business and policy circles in the US and across the world doing a double take.

That is because this is exactly the kind of move the U.S. has spent years criticizing China for.

In China:

The government directly owns big chunks of strategic companies like AVIC (aviation/defence), CSSC (shipbuilding), and Cambricon (AI chips).

Even NIO, the Chinese EV champion, got a $1B bailout from state-owned funds in 2020 — saving it from collapse and giving the local government a seat at the table.

This model — where the state owns pieces of major companies and steers them toward national goals (which may not really coincide with shareholders’ goals) — is what you would usually call State Capitalism. And across decades now the messaging has been that State Capitalism is unfair, market-distorting, and… well, un-American.

But now?

If Washington starts doing the same — equity stakes in chipmakers and defence firms — then are we seeing the initial contours of the US version of it?

Some American commentators are calling this a step towards becoming a Command Economy eventually (how else would you explain Apple’s $600 billion US commitment and its launch of the American Manufacturing Program?).

Command Economy?

Doesn’t that kind of sound more Soviet than American?

Sure, the reasons are there and are undeniably significant when viewed from the lens of American interests: national security, reshoring, tech competition with China.

But the response to those threats?

It does sound like the beginnings of a change in the DNA of the American Free Market Capitalism as we knew it.

By

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

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Now that we are past Jackson Hole, expect a sharp pickup in Fed-watching: from now until the next black out window (Sep 6-15).

Thanks to the prevalence of social media, there is no getting away from the barrage of FOMC-related newsfeeds.

This post isn’t about that.

It is about Authority Bias — our tendency to be influenced by people in positions of authority.

We must be wary of this.

To be clear, this post isn’t really about being dismissive of 5-year frameworks; it’s about not anchoring heavily into them.

Blunders have happened in the past and will continue to happen.

Here is an episode from the yesteryears to illustrate my point:

On Sept 26, 1999, a group of European central banks made a historic blunder.

They signed the first Central Bank Gold Agreement (CBGA).

The context?

Gold was languishing at $250/oz. The prevailing wisdom then was that gold was a ‘barbarous relic,’ an archaic asset that offered no yield.

Central banks, holding thousands of tonnes of it, were eager to sell gold for coupon generating govt bonds.

The problem?

Uncoordinated sales risked flooding the market and crashing the price further, hurting their own balance sheets.

The solution?

The CBGA.

Its ‘genius’ was to create a cartel of central banks not to prop up the price, but to manage its decline. They agreed to cap collective sales to 400 tonnes/yr for 5 years, providing ‘predictability’ to the market. In reality, it was a coordinated effort to offload an asset they believed was headed for obsolescence.

They succeeded in selling.

But the story didn’t end there.

The CBGA was renewed thrice (2004, 2009, 2014), continuing the managed sell-down. For over a decade, Western central banks were steady sellers.

They were selling into what became the greatest bull market in modern gold history.

The very act of capping sales reassured the market that a glut wasn’t coming. It provided a floor, and as other factors emerged — the rise of gold ETFs, and later, the GFC and the unprecedented QE — gold began its epic climb.

The irony is breathtaking.

The agreement designed to manage the orderly disposal of gold ultimately helped create the stability that allowed its price to soar.

Fast forward to the fourth and final agreement (2019). The tone had completely changed — gold remained an important reserve asset.

Why the change?

Because by 2019, the buyers were no longer private investors; they were the central banks of the East — Russia and China primarily — who saw gold’s strategic value as a USD-diversifier.

They were buying what the West was selling.

The CBGA signatories had executed the ultimate trading faux pas on a grand scale:

They sold low and, by ceasing their sales as the price rallied, ultimately bought high later.

The CBGA is a stark reminder that even Central Bank consensus is not always a signal of correctness; it could instead be peak groupthink.

So, keep your newsfeeds open.

And your anchors lightweight.

By

Avinash Menon, CFA

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While it’s the trials and tribulations of Big-Tech that usually has everyone at the edge of their seats, the most telling — and potentially dramatic — signals for the U.S. economy will come from two seemingly staid players:

Walmart and Target.

Their upcoming Q2 2025 earnings are the clearest test for that critical question:

Are Trump’s tariffs starting to bite?

Mark your calendars:

Target reports on Wednesday, August 20, 2025 (pre-market)

Walmart reports on Thursday, August 21, 2025 (pre-market)

Here is why their reports are vital:

The “Who Pays?” Mystery will unravel:

The prevailing assumption that retail giants could force suppliers to fully absorb tariffs is cracking. Walmart has already faced significant blowback from Chinese manufacturers after pleading with them to eat the costs. This puts them in an impossible bind: absorb the hit to margins or pass it on to consumers.

Target’s vulnerability:

Target imports roughly 30% of its goods from China, a vastly higher exposure than many peers. All eyes will be on its Cost of Goods Sold (COGS) line. A significant spike will be a direct signal that tariffs are piercing through corporate defences and hitting the income statement.

The Consumer Canary in the Coal Mine:

Any shift in management commentary on consumer spending will be seismic. Are low-income shoppers trading down even more aggressively? Is the middle class starting to balk at rising shelf prices? These companies have their finger on the pulse of the American consumer like no one else.

Earnings will confirm the hard data:

The latest Producer Price Index (PPI), released on August 14th, showed a 0.9% spike in July — this is the largest monthly increase since June 2022. That spike provides unambiguous evidence that the higher PPI, when viewed alongside a softer CPI, reflects the situation on ground accurately — that businesses have been ‘eating the tariffs’ (see tweet) — at least until the close of July.

Walmart and Target’s earnings will show us exactly if this wholesale pressure is already being trickled into the Main Street retail level (my guess is this has already started to happen during the current quarter, especially in August; next quarter is holiday season, and it could be testy for either of these corporates to attempt the pass-through then)

Rest assured, these two earnings reports are going to be closely watched by both the Trump administration and the Fed.

So, as this week progresses — to use a term from a web series I am currently watching on Netflix with my kids — we will know for certain if that bogeyman of the year ‘TARIFFS’ has finally emerged from his secret lair, in the upside-down world, into the real-world, where consumers still remain oblivious.

To the full effects of tariffs.

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Here is a story from a darker age.

Picture this: It is 2007.

You are finishing an important email when — BAM! — your browser freezes. Not just one tab, everything. That pop-song video you left open in another window? It just assailed your unsaved work.

Welcome to life before Chrome.

Back then, browsers were really clunky:

Internet Explorer 6 was the chief clunker that broke down constantly but came pre-installed

Firefox was the enthusiast’s project – powerful but prone to engine fires

Restoring tabs after a crash?

It was nightmarish!

Until Chrome came calling in 2008, that is.

• Single-tab crashes? Isolated clinically

• Sluggish websites? A new JavaScript engine made them fly

• That annoying search bar? Merged into one magical Omnibox

For the 17 years since then, Chrome has ruled unchallenged.

It didn’t just win the browser wars — it rewired the browser completely. Most of us today forget how bad things really used to be.

Perfect time then for the plot twist.

Enter Perplexity, reportedly making an astonishing $35 billion bid for Chrome.

I am not really focussed on the outcome here (of Perplexity’s bid, that is) but on the fact that the bid in itself signals the next chapter in the evolution of browsers: the age of link-collecting browsers is ending.

This bid is perhaps really about drawing attention to Perplexity’s own web browser — Comet

Now imagine this future:

where the primary focus of a web browser shifts from being used for general browsing to one that delivers AI-powered research and answers …

monetizes through subscriptions…

… and has zero ad tracking.

For those you who lived through the IE6 dark ages, this may feel like deja vu.

For the Gen Z (having not seen the hellish IE6)?

They will probably ask ‘What’s even a browser?’ as AI blends into everything.

P.S. : For those of you who are Product Managers, guaranteed that Scott McCloud’s comic book, created in mid-2008 (you will find the link in comments) explaining the inner workings of Chrome, will not only bring a smile to your face while you read it, but it will also simplify Chrome’s 2008 innovations in layperson terms.

Makes it the best product explainer ever written?

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The chip industry’s story is one of the most extraordinary journeys of modern technology.

Born in the U.S. in 1959 with Fairchild Semiconductor’s first silicon transistor, it has since then traced an extraordinary global arc — through a super-fragmented supply chain spreading across continents, evolving at the speed of Moore’s Law, and enabling the digital revolution.

For seven decades since then, chips grew smaller and faster, not in isolation, but through an intricate, interdependent ecosystem.

The U.S. has undoubtedly always been the lead actor of this magnum opus —designing the most advanced processors (NVIDIA), creating the IP (Qualcomm), and powering devices (Apple).

But the supporting cast was (and remains) just as critical :

1. ASML’s EUV machines (Netherlands) made nanometer-scale etching possible

2. TSMC (Taiwan) turned blueprints into semi-conductors

3. Japan supplied the ultra-pure chemicals

4. Samsung Semiconductor (South Korea) pushed memory and logic to new heights

5. Cirrus Logic, Skyworks Solutions, Inc. (U.S.) perfected the analog/RF chips in pretty much every smartphone.

This division of labour worked brilliantly — until it became a geopolitical vulnerability.

In that context, Apple’s $600 billion U.S. commitment isn’t just corporate investment or some form of corporate patriotism — it’s a natural follow through from America’s intent to reshore, IN FULL, the most complex high-tech industry on the planet today.

The CHIPS Act, export controls, and now this massive private-sector push show that the U.S. is no longer content leading just in design.

It wants control over everything — from design, to materials, to manufacturing.

A reshoring transition of this scale is unprecedented.

Its not going to be smooth.

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The Federal Reserve’s blackout period begins today, silencing FOMC officials until after their July 29-30 FOMC meeting. No speeches, no interviews — just radio silence as markets wait for the next policy decision.

As a tradition, this is as quaint as it gets.

And is in stark contrast to the barrage of tweets from the White House.

So yeah, in the showdown between the “Too Slow” Vs. “Data-dependent” schools of thought, much has been made of Powell’s supposed resistance to political pressure — particularly from Trump.

He has been cast as the lone hand pushing back against a belligerent White House.

But is Powell truly the independent steward of monetary policy that he has often portrayed himself to be? Or is the idea of an independent central bank more fragile than we admit?

The premise — that Powell is apolitical — does not pass a simple fact-check

Take 2019: an election year with President Trump relentlessly pressuring the Fed to cut rates. Despite a relatively stable macro environment, Powell delivered 75 bps of cuts, branding them as a — nebulous sounding — “mid-cycle adjustment.” In an election year, that looked more like a tactical concession.

Cut to 2024 — another election year, another administration. The Fed kicked off with a chunky 50 bps cut, front-loading the easing cycle even as inflation risks lingered. This time, the political beneficiary was a Democratic White House.

To be clear, this isn’t only about Powell’s acts during election years.

With the rare exceptions of Paul Volker (1984) (who hiked aggressively to crush inflation) and William Martin (1960) (who tightened the US into a recession, possibly costing Nixon the election; have a look at the excerpt — see image — from Sebastian Mallaby’s book “The Man Who Knew: The Life and Times of Alan Greenspan” and you will understand that Martin may have even been physically intimidated by the President Johnson!), all past Fed Chairs had also cut rates during an election year.

Definite patterns like these suggest that central bankers, while nominally independent, often act with a keen eye on political timing.

To be clear again, this is not about partisanship — Powell’s actions appear politically symmetrical and not anchored to any ideology.

But that symmetry itself reinforces the point: independence, in practice, is conditional.

Central banks do not operate in vacuums or only within the ambit of a monetary policy — they operate within political, monetary, and fiscal realities.

The narrative of the lone, data-dependent policymaker is tidy.

But the reality?

Its bops you right on your face during an election year.

And looking ahead — with grim humour — the next Fed Chair may not even need to posture as “independent.”

The next Fed chair’s job description might well be reduced to something simple:

“On ye rests the duty to cut the Fed rate to a big, beautiful ZERO — and keep it there until we have a handle over our IOUs.

Thank you for your attention to this matter”

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From Teddy Roosevelt’s Bull Moose rebellion to Ross Perot’s Anti-Establishment plank, US history shows that third parties do not really break existing systems — they might at best create some fault lines.

As Musk toys with a new political experiment, it’s not really about whether he can build a swank new political machinery ground up (You and I believe he could do that and is in fact uniquely positioned ─ technologically ─ to do so), but whether he understands why all previous attempts have crumbled.

The uncomfortable truth?

America’s two-party duopoly is not an accident — it’s by design.

A constitutional design to be precise.

History and America’s electoral system suggest success is nearly impossible without engineering a seismic shift.

Here’s why:

1️⃣ Winner-Takes-All Electoral College

Unlike parliamentary systems, even 20% of the vote nationwide = 0 Electoral College votes unless you win states outright.

Example: Perot won 18.9% in 1992 but 0 EVs.

2️⃣ No Federal Funding Unless You Hit 5%

To qualify for public campaign funds, a party must secure 5%+ in the previous election—a catch-22 for new entrants.

3️⃣ Ballot Access Laws

Each state has different signature requirements—some demand hundreds of thousands just to appear.

… all factors which show up in the brutal math for “Third Parties”:

• 0 – Number of third-party presidential winners since 1860

• 0 – Third-party candidates who won any EV’s since 1968 (when Wallace won 46 and nearly forced a Contingent Election)

• 5% – Vote threshold needed to qualify for federal funding next cycle

Let’s stay with this and understand why “Third Parties” have at best succeeded sometimes only in rewriting the end game:

1️⃣1844: Liberty Party’s 2.3% in NY cost Clay the election, handing victory to Polk.

2️⃣2000: Remember the Florida Cliffhanger? Nader’s 97,488 Florida votes swung the elections towards Bush (Bush’s final margin over Gore was 537 votes)

3️⃣2016: Stein + Johnson’s 5.1% exceeded Trump’s margin in MI, WI, PA.

Now, if Musk wants his “America Party ” to not just play spoilsport-in-chief or fade ─ as history shows ─ but to matter, he must narrow his focus and pick:

1. One of 4 prize states (and ignore the battleground states altogether) ─ California, Texas, Florida, or NY

2. A single wedge issue ─ a Centrist plank ─ that resonates with a potential voter base (Single wedge issues have worked in the past despite sounding stupid ─ while not the most wholesome example: Thurmond won 4 states, in 1948, by advocating racial segregation).

(And you thought polarization is a present-day phenomenon)

And yes, there has been the rare outright success as well.

Musk does not have to look beyond the party in power itself:

The Republican Party was the last “Third Party” to replace an existing major party … in 1856.

And that transformation required:

• A nation divided over slavery

• The collapse of the Whig Party

• A looming civil war

For now, Musk has a mountain to move.

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Last week, when Trump declared the Iran-Israel conflict “over”, markets exhaled— and yeah, the numbers tell the story:

When measured from peak escalation (on June 20th) to the ceasefire (on June 24th)

✅ Oil prices dropped 12%

✅ VIX collapsed 15%

✅ S&P 500 surged 2%

Here is perhaps why Wall Street reacted like it dodged a bullet:

When Trump declared the conflict “over,” something was conspicuously absent from his remarks — regime change.

This was no oversight.

It was a quiet admission of what the US foreign policy establishment refuses to acknowledge: the US is terrible at regime change.

Trump may have done something no US president has managed in decades: learnt from history!

The US track record on regime changes — I have kept this anchored to the Middle East despite the tug within me to include the US’ misadventures in Chile and East Pakistan — reads like a tragedy:

1953 Iran:

The US deposed the democratically elected Mossadegh to “save” Iran, only to tip power to the Shah, which eventually led to the creation of the present-day Islamic Republic that haunts it to this day

2003 Iraq:

The US toppled Saddam to bring democracy, and birthed the ISIS instead

2011 Libya:

The US removed Gaddafi for “humanitarian” reasons and left a country whose borders are super-porous.

The pattern was undeniable.

The US just could not seem to quit its regime-change addiction — even when the strategy had failed every single time.

You remember how the Bush-Blair combine was nicknamed Batman and Robin (during the WMD fiasco in Iraq)?

Well, consider the irony then.

Just months before the Iran crisis, the US regime change addiction played out in UK of all places, when Musk openly called for the fall of the Starmer government.

That’s Batman taking out Robin, the greatest plot twist ever! (Only rivalled by JD Vance’s tweet from a couple of years ago when he called for the US to self-practice regime change. See pic)

What made all those botched attempts at regime-changes galling was the US refusal to learn from and engage nations that actually understand this terrain.

While America grandstands, countries like Oman have over the decades quietly mediated deals, consistently dousing the little fires before they turn into raging infernos.

They succeed where the US fails because they possess what Washington lacks:

✅ Equanimity (no need to be the hero of every story)

✅ Cultural fluency (understanding that not every society wants to be remade in America’s image)

✅ Strategic patience (measuring progress in decades, not news cycles)

Trump’s omission was not an oversight — it was a rare moment of strategic clarity; and an acceptance that the US does not understand the cultural nuances of civilizations that are thousands of years older than itself.

In an era where geopolitical shocks move markets faster than earnings reports, sometimes the most profitable words are the ones left unsaid.

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You thought it could not — or should not — be done.

That the old guards of finance and the rebels from the crypto world were destined to orbit different worlds forever.

That, in the words of Kipling, never the twain shall meet.

Yet here we are.

Mastercard — the second largest payments giant — has shook hands with Chainlink’s decentralized oracle network in what might be the most incredible plot twist yet in fintech history. This isn’t just a collaboration; it’s a full-blown reconciliation of two financial cults that are polar opposites.

Imagine:

1) Banks settling transactions against real-time crypto price feeds?

2) SWIFT messages being replaced by smart contracts triggered by oracle-authenticated data?

(You can expand this to a much larger set of use-cases when you relate to the fact that decentralized oracle networks, like Chainlink or Pyth, essentially let smart contracts talk to the real world)

What’s most beautiful about this partnership?

The end users — merchants, cardholders, banks — will never see the gears turning.

Like all profound technology shifts:

The tech recedes into the background.

And something that had earlier appeared complex becomes mundane.

And we will eventually forget there was even a time when these worlds were apart.

By

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

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For nearly 8 years, Switzerland battled its own economic success.

The CHF — a global safe-haven currency — kept rising, threatening exports and choking growth.

The SNB’s weapon of choice?

Negative interest rates!

In 2015, the SNB pushed rates below zero. Their goal was simple: weaken the franc by adding a holding cost to it. But about 8 years later, by Sep 2022, the results were clear:

1) The CHF kept rising. Investors still flocked to CHF as a safe asset, undeterred by negative yields.

2) Listed private banks like Credit Suisse bolted on more risk, doubling down on investment banking to shore up fee income.

3) Pension funds suffered. Retirees watched their bonds pay nothing.

It was clear.

Negative rates had failed to weaken the CHF.

Now, there is a sense of deja vu after the SNB cut rates to zero last week raising the spectre — once again — of negative rates.

Can the SNB use a different playbook this time around? Something that’s less distortive?

A Citizen’s Dividend is potentially an idea whose time has come

Today, Switzerland has a chance to reset by turning its massive current account surplus and reserves into a dividend for every citizen.

Why this could work:

1️⃣ Avoids distortions

Banks can keep somewhat healthy margins. Pension funds eke out mild real returns.

2️⃣ CHF weakness

Put money in people’s hands, and they will (hopefully) spend it — boosting imports, shrinking the trade surplus, and easing CHF pressure without a blunt tool like negative rates.

3️⃣ A fair deal for citizens

The surplus exists because of Swiss labour and innovation so why shouldn’t there be a dividend?

A counter point to 3️⃣ could be the results of a past referendum:

In 2016, Switzerland held the world’s first referendum on Unconditional Basic Income (UBI).

The result?

A 76.9% rejection!

Now, while you could surmise that NOBODY* actually rejects free money: the Swiss did just that!

(*You don’t have to look beyond the Americans; their government sent them Federal Cheques in 2020, which a whole lot of them promptly used to sharpen their day-trading skills 😀):

The Swiss said NO to what they perceived to be Free Money.

Why?

IMO, the UBI proposal may not have been communicated well (recall it was the Brexit year, also Gen AI hadn’t happened yet), resulting in the Swiss work ethic clashing with the perception of ‘money for nothing’.

For the Swiss perhaps, the alarm bells against developing a ‘subsidy mindset’ rang out loud and clear.

Could it have been introduced instead as the Norway Model?

If implemented this time, here is the rough-and-ready math:

1️⃣ Allocate 1-2% of the SNB’s $1 trillion foreign reserves ($10-20B/year)

2️⃣ Redirect 5-10% of annual trade surpluses (CHF 100B+ → CHF 5-10B/year)

3️⃣ With a population of 8.7 M → ~ CHF 3,000 / year / citizen

Switzerland’s choices now?

Repeat the failed model of 2015 or pioneer a new one.

One that shows a Swiss Knife-kind of versatility.

By

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

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