Robotaxis Park Badly, Higher Rates Ahead, Luxury Stock Decisions, Paramount Deal Drama, Automakers Need Diversification? Weak Jobs Report, Understanding NUA Benefits & More

Apparently, self-driving cars don’t know where they shouldn’t park

Self-driving cars are proving to be remarkably safe on the road and, so far, have demonstrated a better safety record than human drivers in many situations. However, like all technology, they still lack common sense. They may be able to navigate traffic, but they don't always understand where they can and more importantly, cannot park.

Over the past year and a half or so in Austin, Texas, Waymo's fleet of roughly 300 robotaxis has accumulated nearly $10,000 in parking tickets. While autonomous vehicles are doing well when it comes to following maps and traffic laws, they can become confused in situations that require human judgment. Reports indicate they sometimes struggle to follow directions from first responders, stop in places that block traffic, park in handicap spaces, or fail to recognize tow-away zones.

One notable incident in 2025 involved a Waymo vehicle that stopped on the side of a road in northern Austin while blocking an active railroad crossing. Police reportedly weren't sure how to move the vehicle, so they called a tow truck to remove it. There have also been reports of Waymo vehicles stopping in front of parking garage entrances and parking lot access points for no obvious reason, preventing other drivers from entering or exiting.

These issues will likely be resolved as the technology improves. Still, they highlight an important limitation. These robotaxis can process enormous amounts of data and make incredibly complex driving decisions, but it doesn't possess the instinctive common sense that people rely on everyday. For now, that's one area where humans still have an advantage over machines.

Why Interest Rates Could Stay Higher Than Many Expect

One of the biggest debates in financial markets today is where interest rates are heading. While recessions can temporarily push yields lower, there are several long-term structural reasons why interest rates may remain elevated compared to what investors became accustomed to after the 2008 financial crisis.

The first and perhaps most important issue is the federal government's fiscal position. U.S. federal debt has climbed to roughly $40 trillion which is about 120% of GDP, a level that is historically very high outside of major wars or national emergencies. For much of the post-World War II period, debt-to-GDP remained well below current levels before accelerating sharply after the financial crisis and again during the pandemic.

Just as concerning is the federal deficit. The government continues to run annual deficits exceeding 5% of GDP, meaning debt is growing faster than the economy itself. As long as Washington continues borrowing at a pace that exceeds economic growth, the debt burden becomes increasingly difficult to stabilize. More Treasury issuance means investors must absorb a growing supply of government bonds, which can place upward pressure on yields unless demand keeps pace.

Another factor is the Federal Reserve's balance sheet. During the financial crisis and the pandemic, the Fed became one of the largest buyers of Treasury and mortgage-backed securities, helping suppress long-term interest rates through quantitative easing.

While the Fed has begun reducing its holdings, its balance sheet remains enormous by historical standards. Federal Reserve assets of about $6.7 trillion are currently equal to roughly 21% of U.S. GDP. Before the2008-09 financial crisis, the Fed's balance sheet averaged only about 6% of GDP, meaning it remains more than three times larger than its pre-crisis norm. Although assets have declined from the April 2022 peak of approximately $9 trillion, or roughly 35% of GDP, the balance sheet is still exceptionally large compared to history. Another comparison that is troubling is Fed holdings currently amount to about 26.5% of all assets held by U.S. commercial banks versus the norm of about 10% before the financial crisis.

Continuing to shrink the balance sheet would allow private markets to play a larger role in determining interest rates while reducing the Federal Reserve's extraordinary footprint in financial markets. A return toward more normal market functioning would likely mean less artificial downward pressure on long-term yields.

History also provides perspective on where Treasury yields could ultimately settle. Since 1958, the 10-year Treasury yield has averaged roughly 1.92 percentage points above inflation. That is simply a long-run average and there have been periods when the spread exceeded 5 percentage points and others when it turned negative, but it does give some guidance on a normalized level for the 10-year treasury.

When it comes to mortgage rates, they are closely tied to Treasury yields as well. Historically, the spread between the 30-year fixed mortgage rate and the 10-year Treasury yield has generally averaged about 1.5%to 2%, reflecting credit risk, servicing costs, and other factors. Post Covid, this spread did spike to over 3%, but that 1.5% to 2% range seems to be pretty consistent going back to 1990. If Treasury yields remain structurally higher because of persistent deficits, elevated debt levels, and a still-large Federal Reserve balance sheet, mortgage rates could also remain above the exceptionally low levels many homeowners became accustomed to.

None of this means rates cannot decline during economic slowdowns or recessions. They almost certainly will at times. But investors expecting a permanent return to near-zero interest rates may be overlooking the structural forces now shaping the bond market. High government debt, persistent fiscal deficits, continued Treasury issuance, and a Federal Reserve balance sheet that remains well above historical norms all suggest that the era of ultra-cheap money may prove to be the exception rather than the rule.

Should You Buy or Sell That Luxury Brand Stock?

Luxury brand stocks that sell high-end handbags, jewelry, and other luxury goods have been in a bear market for the past couple of years. After aggressively raising prices during and immediately following the pandemic, it appears the buying frenzy for luxury products has faded.

There may be one bright spot beginning to emerge, particularly in the jewelry category. Richemont, the parent company of Cartier, Van Cleef & Arpels, and Buccellati, reported a 24% year-over-year increase in jewelry sales in its most recent quarter. If you don't recognize those brands, don't worry, the important takeaway is that they sell some of the world's most expensive jewelry, and demand in that segment has remained surprisingly resilient.

Luxury giants, including Kering, the parent company of Gucci, as well as LVMH and Hermès have suffered steep declines over the past few years. LVMH has fallen from more than $900 per share to around $500, while Kering has dropped from over $900 to roughly $300 as Gucci's sales have struggled.

During the pandemic, some consumers even purchased luxury handbags with the expectation that they would appreciate in value. While a handful of extremely rare bags have done just that, those cases are the exception rather than the rule. If you're buying a luxury handbag, buy it because you genuinely enjoy it not because you expect it to become a profitable investment.

The same caution applies to the stocks. My view is that the surge in luxury spending during and immediately after COVID was fueled by an extraordinary amount of stimulus money and excess savings, creating an artificial spike in demand. As those conditions have faded, so has the appetite for expensive discretionary purchases.

While there may be periods of recovery, especially in categories like jewelry, I don't expect the luxury sector to return to the pandemic-era buying frenzy anytime soon. That makes me cautious on both the products themselves as investments and the stocks that depend on that level of consumer spending.

The Paramount deal just can't stay out of the news

Next month will mark one year since Paramount began its pursuit of Warner Bros. What started as an unsolicited bid eventually turned into an agreement for Paramount to acquire Warner Bros. in an $81 billion deal. However, the transaction continues to face significant legal hurdles.

Several state attorneys general have raised antitrust concerns, forcing the deal into the court system. In the meantime, Paramount has agreed to pay a $650 million per quarter "ticking fee" if the deal is not completed by September 30. On top of that, the company's legal bill has already reached roughly $160 million, and the case hasn't even gone to trial yet.

The costs only increase from here. If the merger is ultimately blocked or isn't completed by June 2027, Paramount would owe Warner Bros. a staggering $7 billion breakup fee.

Paramount is pushing to begin the trial by November 4, but the attorneys general seeking to block the deal want to delay proceedings until next April. Paramount does have some leverage, as it has major operations and thousands of employees in states such as California, New York, and New Jersey. Even California Governor Gavin Newsom has encouraged the state's attorney general to find an out-of-court resolution.

For investors, this has been an extremely nerve-racking situation. Paramount shares are currently trading around $8, down roughly 41% year to date after starting the year near $13.40 per share. Every delay adds more uncertainty, more legal expenses, and more ticking fees.

There are also strong incentives for the companies involved to get the deal across the finish line. Warner Bros. CEO David Zaslav could reportedly receive compensation worth more than $800 million if the transaction is completed, giving him a significant financial incentive to see the merger succeed.

This will likely continue to test shareholders' patience. As the legal battle drags on, the legal bills and ticking fees continue to pile up. It makes me wonder: Is this deal really worth it for David Ellison and Paramount?

Should U.S. Car Makers Like Ford and General Motors Diversify Their Businesses?

It's no secret that the auto industry is highly cyclical, with periods of strong demand followed by inevitable slowdowns. Right now, both Ford and General Motors are generating significant cash flow and posting solid earnings despite paying billions of dollars in tariff costs and writing off substantial losses from their electric vehicle investments. But the question investors should be asking is: when does the party end?

One concern is affordability. New vehicle prices continue to rise, making it increasingly difficult for many consumers, especially younger buyers, to purchase a car. At the same time, younger generations simply don't seem as excited about getting behind the wheel as previous generations were.

The numbers are striking. Today, only about 25% of 16-year-olds have a driver's license, roughly half the percentage from 1980, when about 50% were licensed. Even among 18-year-olds, only around 60% have a driver's license today, compared with roughly 80% nearly five decades ago. Ride-sharing services such as Uber and Lyft have made it easier for young adults to pay for transportation rather than own a vehicle themselves. I also can't help but wonder how that's changed the dating scene compared with past generations.

The auto industry has faced this type of challenge before. During the 1980s, both Ford and General Motors spent billions of dollars diversifying into financial services and defense businesses. Meanwhile, Toyota stayed focused on building reliable, high-quality vehicles that consumers wanted to buy. While Detroit was chasing diversification, Toyota was steadily gaining market share with better products.

I hope today's management teams remember that lesson. Auto manufacturing will always be cyclical, and no business grows every single year. The best long-term strategy may be to focus on building vehicles that customers genuinely want rather than chasing growth in unrelated industries.

That said, there are signs that history could be repeating itself. Ford recently announced Ford Energy, a grid-scale battery storage business, while General Motors continues expanding its military vehicle business and is working with Lockheed Martin on defense-related technologies. These ventures could prove successful, but investors should hope management doesn't lose sight of its core business.

History has shown that the companies producing the best vehicles over the long run are usually the ones that create the most value for shareholders.

A Weak Jobs Report, But There Were a Few Bright Spots

There is no sugarcoating it, today's jobs report was weaker than expected and adds to the evidence that the labor market is continuing to cool. Total nonfarm payroll employment fell by 23,000 jobs in the month and May and June saw a combined negative revision of 103,000 jobs. May was revised from 129,000 to 66,000 and June was revised from 57,000 to 20,000.

Even though the report was softer than anticipated, the headline payroll number doesn't tell the entire story. A meaningful portion of the weakness came from government employment as it fell by 53,000 jobs in the month. Local government education jobs were particularly weak with a decline of 50,000 jobs as they can be volatile during the summer because of seasonal adjustments.

There also appear to be temporary distortions related to the FIFA World Cup, which likely shifted hiring patterns. Leisure and hospitality showed a decline of 40,000 jobs and retail trade declined by 19,000 jobs. Those factors don't erase the weakness, but they do suggest the private sector wasn't quite as soft as the headline number implies.

There were still several areas of strength in the report worth highlighting. Healthcare remained a key driver of payroll growth, adding 22,000 jobs. While that was below its 12-month average of 36,000, it continues to be one of the strongest and most consistent sources of job creation. Construction also posted a solid gain, with payrolls increasing by 22,000, suggesting that demand in the sector remains resilient despite elevated interest rates and ongoing affordability challenges.

The unemployment rate remained one of the stronger aspects of the report, falling to 4.1%. By historical standards, that still reflects a relatively healthy labor market. However, there is an important caveat. The labor force participation rate declined again, meaning fewer Americans were either working or actively looking for work.

The participation rate fell to 61.4%, its lowest level in more than five years and, excluding the Covid pandemic, the lowest reading in roughly 50 years. Likewise, the employment-to-population ratio slipped to 58.9%, its lowest level since May 2014. A declining participation rate can make the unemployment rate appear stronger than it actually is because people who stop looking for work are no longer counted as unemployed.

One positive development was wage inflation. Average hourly earnings continued to moderate, with annual wage growth slowing to roughly 3.2%. That's much closer to a pace consistent with the Federal Reserve's inflation target and suggests wage pressures are continuing to ease without collapsing. Slower wage growth should help reduce inflationary pressures while still allowing workers to see income gains.

The next few monthly reports will be important. If private-sector hiring continues to weaken and participation keeps falling, concerns about the broader economy will likely increase. But if today's weakness proves to be exaggerated by temporary factors, the labor market may still be on track for a gradual slowdown rather than a sharp deterioration.

Financial Planning: Understanding Net Unrealized Appreciation (NUA)

Employees who have built up significant company stock inside their 401(k) may have a valuable tax planning opportunity called Net Unrealized Appreciation (NUA). NUA allows retirees to move company stock from their retirement plan into a brokerage account and receive long-term capital gains treatment on the stock’s growth instead of paying higher ordinary income tax rates. The benefit of NUA can be significant for employees who purchased company stock at a low cost and saw it grow substantially over time. However, the decision involves a tradeoff: the stock’s original cost basis becomes taxable as ordinary income in the year of distribution in exchange for the benefit of receiving long-term capital gains treatment on the appreciation when shares are eventually sold. If the cost basis is too large, the upfront tax liability may outweigh the potential tax savings, and keeping the stock inside a retirement account and paying ordinary income taxes on future withdrawals may be the better strategy.

Strategy, Famous for Its Bitcoin Holdings, Continues to Struggle

It appears that the door may be closing on Strategy, a company whose primary purpose has been to buy Bitcoin and benefit from rising cryptocurrency prices. For quite some time, we have questioned the long-term viability of this business model, and recent developments have only reinforced those concerns.

Rather than continuing to be a buyer of Bitcoin, the company recently sold 1,638 Bitcoin to fund preferred stock dividends and share repurchases. The sale generated approximately $105 million in cash, but it still does not provide a clear path toward a sustainable business model that can consistently generate profits.

Because of the decline in Bitcoin's price, Strategy reported a net loss of $8.2 billion during the second quarter. The company still holds 842,138 Bitcoin, which, depending on market prices, is worth roughly $53 billion.

The challenge is that Bitcoin does not pay dividends, generate earnings, or produce cash flow. As a result, to raise cash for interest payments, dividends, operating expenses, or other obligations the company must sell some of its Bitcoin holdings, issue more debt, or sell shares.

The stock has fallen roughly 75% over the past year and currently trades just under $100 per share, down from a 52-week high of more than $414 per share.

We continue to see significant challenges ahead for Strategy and remain skeptical that the company can dig itself out of the massive hole it has created. Unless Bitcoin experiences a substantial and sustained rally, the company's reliance on a non-income-producing asset may continue to put pressure on both its financial position and its shareholders

Fashion companies have a new trend called "Naked Dressing"

From time to time when I've been out recently, I've noticed some women wearing fashions that are much more revealing than in the past and sometimes even completely see-through. I discovered that retailers such as Zara, Michael Kors, Aerie, and Victoria's Secret all sell clothing designed to be worn in public that incorporates sheer or transparent fabrics.

My first thought was that this was simply a trend among younger women in their late teens or early 20s who wanted to push the envelope. However, further research suggests the trend spans a much wider age range, with women from their 20s through their 60s embracing the style. Many women in their 40s and 50s describe it as empowering and a modern expression of confidence, femininity, and self-assurance on their own terms.

The trend began with celebrities, runway models, and high-fashion designers, but it has now entered the mainstream. As a result, it has also created some awkward situations. There have been reports of attendees wearing sheer outfits to evening business conferences, raising questions about what is appropriate professional attire.

Perhaps the biggest controversy has been at weddings, where some brides have complained that guests wearing extremely revealing or see-through dresses drew attention away from the ceremony. In response, some professional wedding planners now recommend including a dress code on wedding invitations that specifically discourages "naked dressing."

Whether this trend proves to be a lasting fashion movement or simply another passing fad remains to be seen. Fashion has been moving toward less restrictive and more revealing styles for well over a century, from the days of corsets and structured undergarments to today's sheer fabrics. It will be interesting to see what the next evolution of fashion looks like.

Colleges Are Raiding Their Endowment Funds

Private colleges have been facing increasing financial pressure as fewer students enroll in four-year programs and some schools have lost federal funding. In response, roughly 200 colleges including Notre Dame have reportedly borrowed from or used restricted endowment funds to help cover their day-to-day operating expenses.

If true, this is deeply troubling for several reasons. Trustees who oversee endowment funds have a fiduciary responsibility to honor the intent of donors. Many of these restricted gifts were made to fund scholarships, academic programs, or other specific purposes, not to help cover big fat paychecks for administrators and wasting money on frivolous things.

Like any business, colleges must adapt when financial conditions become difficult. That may mean reducing administrative costs, trimming executive compensation, delaying nonessential projects, or cutting unnecessary perks. Those decisions are never easy, but they are far more appropriate than diverting funds that donors intended for a specific purpose.

Fortunately, some states have begun strengthening donor protections. Attorneys general and lawmakers in states such as Kansas, Kentucky, Georgia, and Montana have passed laws in recent years that allow donors to pursue legal action if colleges fail to honor the restrictions placed on charitable gifts.

More financial problems may come to light over the next decade. Some analysts predict that roughly 440 colleges could close or merge, and those restructurings may bring greater scrutiny to how schools have managed their finances and endowment funds.

If colleges continue to blur the line between restricted donations and operating expenses, they risk more than legal challenges, they risk losing the trust of future donors. Once that trust is broken, many individuals and families may think twice before making charitable gifts, especially if they believe their donations could be used for purposes they never intended.