What the Trump?

Hi there, 

Welcome to FinSoar. I have three stories about math that doesn't work, promises that can't be kept, and markets that are looking for a reason to go bearish:

President Trump promised Americans $2,000 tariff dividends over the weekend. I don’t know about you, but the math doesn't add up for me…

Trump posted on Truth Social that "a dividend of at least $2,000 a person (not including high-income people!) will be paid to everyone." He claimed the US is "taking in Trillions of Dollars" from tariffs and will use the money to pay down the $37 trillion national debt.

The actual numbers tell a different story. Through October, the federal government collected $309.2 billion in tariff revenue, up from $165.4 billion in the same period last year. The Tax Foundation projects annual tariff revenue above $200 billion if current rates hold.

Erica York at the Tax Foundation calculated that a $2,000 payment to everyone earning under $100,000 would reach 150 million adults and cost nearly $300 billion. That's more than the projected 2025 tariff revenue. 

The Committee for a Responsible Federal Budget estimated the plan could cost $600 billion if structured like COVID payments.

Treasury Secretary Scott Bessent tried damage control on ABC's This Week, saying the $2,000 might not be a check at all but rather tax cuts already passed in July's legislation. "No tax on tips, no tax on overtime, no tax on Social Security," Bessent said. In other words, no new money.

York found that even restricting payments to people making under $75,000 annually wouldn't generate enough revenue. "To me, this seems less of a thought out policy proposal and more of 'A $2,000 check sounds good,'" York said.

The timing couldn’t be more awkward. The Supreme Court is weighing the legality of Trump's tariffs imposed under the International Emergency Economic Powers Act. If invalidated, it would take seven years to raise enough tariff revenue to cover the dividend cost.

Nobel laureate Paul Krugman called it "a terrible idea" and "deeply irresponsible." The plan could make inflation worse. Fortune reported analyst Chris Motola at National Business Capital warned of "a weird feedback loop where the tariff stimulus justifies passing on more tariff costs."

Giving consumers more cash creates demand, which drives prices higher. The tariffs themselves raise prices as businesses pass costs to customers. This could force the Federal Reserve to hike interest rates again.

Trump had previously promised to use tariff revenue to reduce the deficit and pay down debt. Bessent falsely claimed tariffs would "pay off our deficit." Now, Trump wants both: payments and debt reduction.

Any payment plan would require congressional approval. The government has been shut down for 40 days with no end in sight. Senator Josh Hawley introduced legislation for $600 tariff rebates in July. It went nowhere.

Best not to count on that check.

Sources: Business Insider, Al Jazeera, Axios, Bloomberg, Fortune, NPR

Michael Burry broke his two-year X hiatus with a single post: "Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play."

The man who called the housing crisis then revealed why. Scion disclosed bearish put options on 1 million Nvidia shares and 5 million Palantir shares with notional values of $187 million and $912 million. The total $1.1 billion bet dominated Scion's eight-holding portfolio, which included just four direct positions worth $68 million combined.

Markets didn't take it well. 

Palantir dropped 8% and Nvidia fell 4%. The Nasdaq Composite lost 2%. Japan's Nikkei tumbled 2.5%. South Korea's KOSPI slid 2.85%. Bitcoin briefly dipped below $100,000.

Palantir CEO Alex Karp went ballistic. "The two companies he's shorting are the ones making all the money, which is super weird," Karp told CNBC. "The idea that chips and ontology are what you want to short is batshit crazy."

Burry fired back on X: "Doesn't surprise me one bit that Alex Karp and his 'ontology' cannot crack a simple 13F." He added that recognizing when your information is insufficient for conclusions is fundamental to any rigorous model.

Palantir had just posted record revenue of $1.18 billion, up 63% year-over-year, with a 33% profit margin. But the company's market cap hit $450 billion against expected annual revenues of just $4.4 billion.

Burry posted Star Wars memes and charts drawing parallels to the dot-com crash. One showed slowing growth in Amazon, Alphabet and Microsoft's cloud divisions. 

Another highlighted surging tech sector capital expenditures echoing patterns before the dot-com crash and 2008 crisis. A third mapped circular dealmaking between Nvidia, OpenAI, Oracle, and Microsoft.

The valuations tell a stark story. Nvidia's price-to-sales ratio topped 30. Palantir's hit 152. Before the dot-com bubble burst, megacap companies peaked at P/S ratios of 30 to 40, a ceiling that's never been sustained long-term.

History favors Burry's bet. Every game-changing technology faces an early bubble: the internet, genome decoding, nanotechnology, 3D printing, blockchain, the metaverse. AI shows no signs of being the exception.

The market is extremely vulnerable right now. 

Tech stocks drove over 90% of the S&P 500's October returns. The Magnificent Seven alone contributed 80%. Goldman Sachs and Morgan Stanley CEOs predicted 10% to 20% drawdowns in the coming years.

Burry's cryptic posts suggest he may have already closed his Palantir position. He posted "Fake news! I am not 5'6" alongside a photo with Christian Bale, who played him in The Big Short. The message: he's not short, physically or financially.

His X bio now reads "Cassandra Unchained: Missteps to Mayhem, Coming December 2025." The reference to the Greek priestess cursed to utter true prophecies never believed hints at what's ahead.

Sources: Fortune, Business Insider, The Washington Post, Nasdaq

Fifty thousand delegates descended on Belém, Brazil, for COP30 this week. The US sent nobody.

The White House confirmed it won't send any high-level representatives to the UN climate summit, an unprecedented absence. Trump withdrew from the Paris Agreement on his first day in office and told the UN General Assembly that climate science is "the greatest con job ever perpetrated on the world."

UN climate chief Simon Stiell opened the conference with a blunt message: "Your job here is not to fight one another. Your job here is to fight this climate crisis, together." Chinese President Xi Jinping and Indian Prime Minister Narendra Modi also skipped the talks.

Last year's COP29 set a new target of $300 billion annually from wealthy countries by 2035. Developing nations need at least $1.3 trillion annually, with finance ministers producing a "Baku-to-Belem Roadmap" on how to reach that figure. 

Still far short: the $7.4 trillion needed annually through 2030 to meet global climate targets.

The emissions gap is growing wider. Countries need to cut emissions 55% by 2035 compared to 2019 levels. Current pledges would only deliver a 12% reduction. The world is very likely to breach the critical 1.5 degrees Celsius threshold within a decade.

One bright spot: China's CO2 emissions have been flat for 18 months. The streak started in March 2024, with transport emissions down 5% and wind, solar, nuclear, and hydro covering 90% of electricity demand growth in Q3 2025.

Brazil's leadership faced immediate criticism. The country approved oil drilling near the mouth of the Amazon just weeks before hosting. Environmental minister Marina Silva defended it as "perfectly compatible" with transition plans. Critics called it "an act of sabotage against the COP."

Bill Gates added fuel to the fire with a memo arguing that money now spent on emissions reduction would be better spent on economic growth. 

"Health and prosperity are the best defense against climate change," Gates wrote. Trump celebrated on Truth Social, claiming Gates admitted he was "completely WRONG" about climate. Gates countered that it was a "gigantic misreading."

The insurance industry sees what's coming. Researchers warn that climate change is breaking traditional insurance models. 

In Iowa, home insurance premiums jumped 62.8% between 2012 and 2022. Nearly 180 Iowa researchers signed a climate statement warning that rising temperatures and destructive weather will keep driving premiums higher. Home insurance rates in Iowa are predicted to increase 19% in 2025.

Elizabeth Kolbert captured the mood: "Increasingly, the response to all this has seemed to be a dulled acceptance." After 33 years since Rio, it's hard not to be discouraged. But there's no getting away from climate change. All other problems are linked to it and will be exacerbated by it.

Sources: The New Yorker, Reuters, NPR, Al Jazeera, CNBC, The Conversation, The Gazette, Iowa Capital 

That’s all for today!