Category: 3. Business

By Naeem Aslam

The Fed is making decisions without actual data – but investors are still banking on rate cuts

The U.S. government shutdown has sidelined the release of economic data, impairing the Federal Reserve’s judgment.

A defensive rotation into Treasury bonds, gold, high-grade corporate bonds and solid dividend-paying stocks would be likely.

The irony is rich: The U.S. Federal Reserve is about to walk into its next policy meeting in late October – scheduled for Oct. 28-29 – with less and less reliable information. The U.S. government shutdown has already halted the publication of critical data, including labor statistics, consumer-price index releases and more. At precisely the time when timely economic insight matters most, the Fed – and, by extension, markets – are being forced to navigate in the dark.

In a perceptive statement, Fed governor Stephen Miran stressed on Oct. 3 that shifts in policy should be founded on current availability of data – i.e., monthly jobs and inflation data. He repeated his earlier position that the “neutral interest rate” is above zero – contrary to some models which assume it to be close to zero – and suggested that cuts could be less steep or more fine-tuned than consensus expectation. Dovish but cautious, Miran makes a case for cuts, but not without clarity.

Read: The Fed hawks are battling the doves – and then there’s Stephen Miran

It’s not posturing. As the shutdown cripples Bureau of Labor Statistics activity, the Fed loses its gold-standard measures of labor-market conditions and inflation. Already, private substitutes like ADP’s (ADP) report – which noted a surprising loss of 32,000 jobs in September – are filling in, but they are less complete and less credible than the formal releases. (The BLS, indeed, said it would freeze data collection and releases until funding returns.) The loss hurts at the very center of Fed decision-making: Without new information, the committee might turn reactive rather than proactive.

What does the Fed do without new data?

Here are three likely scenarios:

1. Postpone or hold back: The Fed might decide to wait and hold back on rate cuts in October, giving forward guidance but not putting through additional cuts until data releases pick up again. That approach would signal caution, but it might lose steam if there are market expectations for moves.

2. Continue on trend and proxy data: Or, the Fed uses lagging indicators, staff internal forecasts and proprietary data (e.g., ADP, state employment surveys) to make educated guesses about trends. Here, their decision is more subjective and susceptible to error – especially at a macro turning point.

3. Conduct an aggressive, surprise cut: A daring (and risky) option would be cutting rates even in the absence of new data, on the argument that the risks of a decline are growing. This action could initiate bond rallies and intense equity gains – but also leave the Fed open to criticism for doing something that wasn’t supported by evidence.

History gives only qualified comparables. In prior shutdowns – for example, 2013 and 2018-2019 – there were some delays of data, but the Fed avoided surprise shocks and tended to follow anticipated pathways. This time, however, is unique: There are warning augurs of fissures for the economy, inflation is persisting and markets are on edge. A badly timed misstep or decision will have more spillovers now.

Labor data is the Fed’s guiding star – and the shutdown endangers it

Economic comparisons, even after data reporting returns, will be askew until normalization sets back in.

For decades, U.S. monthly nonfarm payrolls, the unemployment rate and average hourly earnings have been the Fed’s main measures of labor-market slack, wage pressure and the risk of inflation. These measures are used to calibrate whether policy is loose, neutral or too tight.

Without BLS data, the Fed’s compass loses its calibration. Aside from the technical difficulty, the shutdown has real economic impacts: More than 900,000 federal workers are said to be furloughed or working without pay, disrupting consumption, contracting demand and obscuring the baseline off which labor metrics are gauged. The extrication of the federal workforce from routine economic activity means comparisons, even after data reporting returns, will be askew until normalization sets back in.

Traders, confronted with this information void, could rely more on substitutes – regional Fed surveys, state reports and private payroll providers like ADP. Some institutions have already boosted exposure to defensive assets, volatility hedging and cash buffers, expecting broader sentiment swings. The longer the blackout continues, the more market action continues to decouple from fundamentals and turn toward narrative-driven flows and momentum on unwarranted fundamentals.

Market risks and tactical investments

If the markets see policy paralysis from the Fed, the price of risk assets could plummet.

The largest risk for investors right now is misinterpretation. A dovish signal from the Fed, out of alignment with the economy, could instigate runaway inflation or bond-market repricing. A hawkish stance without clarity, on the other hand, might strangle growth a little too soon.

Moreover, if the markets see policy paralysis from the Fed, the price of risk assets could plummet. If that happens, a defensive rotation from investors into Treasury bonds BX:TMUBMUSD10Y, gold (GC00), high-grade corporate bonds and solid dividend-paying stocks would be likely.

Meanwhile, growth stocks (especially AI, semiconductors and technology overall) will remain volatile and reactive to shifts in sentiment or partial surprises.

In a world where macro filters are muted, stock-specific fundamentals may dominate. Companies with strong balance sheets, consistent earnings and secular tailwinds may decouple from the macro noise. This is how active stock pickers could outperform benchmark flows.

Meanwhile, markets based on hopes for global growth will be particularly vulnerable. Oil (CL00) (BRN00), industrial metals and credit-sensitive debt might overshoot on both the upside and downside, especially around events based on geopolitics.

Read: One central bank seems worried about U.S. tech valuations. It’s not the Fed.

Policy and markets reach a crossroads

Resolution of the shutdown and the return of data will be worth as much as the data itself.

We have entered perhaps one of the most problematic policy windows of this decade. The Fed meets at the end of October at exactly the time when its decision-driving inputs are probably most disrupted. Fed governor Miran’s public call for clarity is no empty commentary – it highlights the structural risk embedded in today’s world: policy without transparency.

The markets will shift attention less toward the decision of the Fed, but rather toward the tone, calibration and forward guidance. If the committee projects flexibility and intent to act when clarity is restored, then the Fed might hold on to its credibility. If confusion or erratic shifts become a reality, however, it might erode financial-market confidence in financial stability overall.

In the coming weeks, resolution of the shutdown and the return of data will be worth as much as the data itself. Investors need to prepare for volatility, profit from dislocations, hedge carefully and direct allocations toward structural winners rather than macro timing. Because when there is a blackout, clarity – sector insight, balance-sheet superiority, differentiated themes – can hold outsize advantage.

Naeem Aslam is chief investment officer at Zaye Capital Markets in London.

More: Government shutdown means Fed lacks crucial data as it considers rate cuts

Also read: The Fed now faces a ‘perfect storm’ over inflation, jobs and Americans’ financial stability

-Naeem Aslam

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  10-11-25 1318ET
Copyright (c) 2025 Dow Jones & Company, Inc.

Hours after Donald Trump threatened Beijing with “massive” tariffs on Friday over its export controls on rare earths, he appeared to put his words into action by imposing a 100 per cent levy on imports from China.

But the US president’s move hinted at a more calibrated approach than some had expected.

Instead of imposing the tariffs immediately, they will come into effect on November 1, two days after a scheduled meeting with President Xi Jinping. That suggested Trump was creating room for a solution even though he had said there was no point in meeting Xi at the Apec forum in South Korea.

Asked what would happen if China reversed the export controls, Trump said: “We’re gonna have to see what happens. That’s why I made it November 1.”

One former US official described his response as a “mega Taco”, using the acronym for “Trump always chickens out” — a phrase that came into vogue after backing down in the face of Chinese pressure.

“Xi will see it exactly for what it is: a clear indication of weakness, a lack of resolve, if not desperation,” he said.

The sweeping export controls had shocked the White House, partly because they came three weeks before Trump was expected to hold his first meeting with Xi since returning to the White House.

China has become accustomed to the ‘paper tiger’ behaviour of the US.

Early on Friday, Trump said he might cancel the meeting. Later he said: “I haven’t cancelled, but I don’t know that we’re gonna have it. But I’m gonna be there regardless, so I would assume we might have it.”

The new Chinese controls require foreign companies that export products with rare earths from China to get approval from Beijing. Combined with Trump’s response, they obliterated the trade ceasefire between the powers.

“Two huge heavyweights in the ring. I haven’t had so much fun since the Thrilla in Manila,” said a second former US official, referring to the 1975 boxing match in the Philippines between Muhammad Ali and Joe Frazier.

In his first comments about the issue, Trump had lashed out at China, describing the controls as “very hostile”. He said that, beyond tariffs, many other countermeasures were “under serious consideration”.

His reaction sparked hope among some China hawks in his administration, who have been frustrated that he has prevented them for taking tough security actions to avoid jeopardising the trade talks and the summit.

One US official said “Christmas has come early” for the China hawks.

Those hawks are hoping that China has angered Trump so much that he will allow them to start taking aggressive measures — just as he gave the green light for tough security actions against Beijing in 2020 after blaming China for Covid-19 when his handling of the pandemic came under criticism.

“The China hawks in the administration must feel vindicated as they have watched with dismay as Trump has taken a more conciliatory approach towards China in recent months,” said Wendy Cutler, vice-president of the Asia Society Policy Institute.

People familiar with the situation said the US was preparing a range of possible retaliatory actions, including sanctions on Chinese companies, new export controls, and putting Chinese groups on a trade blacklist.

Experts are debating whether China has overplayed its hand with the export controls, or whether Trump’s response is playing into Beijing’s hands.

Dennis Wilder, a former CIA China expert, said Trump was doing what Xi wanted — reacting emotionally.

“Trump is embarrassed and must protect himself from the hawks’ criticism,” Wilder said. “Xi had to know exactly how Trump would react. He has upped the ante in the great poker game. Does Trump fold or put his chips in?”

But others argued that China had misread the US. “This week’s export control expansion looks like a miscalculation. What Beijing sees as leverage, Washington sees as betrayal,” said Craig Singleton, a China expert at the Foundation for the Defense of Democracies.

John Moolenaar, the Republican chair of the House China committee, said China had “fired a loaded gun at the American economy”. He urged Congress to pass legislation to counter Beijing, including a bipartisan bill that would revoke China’s permanent normal trade relations status.

The first former US official said the key to what happens next between Beijing and Washington depended on how Xi reacted to Trump’s threat.

“The Chinese move has shattered everything. Xi is not going to say mea culpa,” he said. “His approach has been maximum engagement, zero concessions and asymmetrical strong retaliation.”

Nazak Nikakhtar, a trade lawyer at Wiley Rein, argued that China was unlikely to back down, particularly after watching US markets fall earlier this year when Trump imposed 145 per cent tariffs on its goods.

“Some think this is a negotiation, but they have got Xi all wrong,” said Nikakhtar, a commerce department official in Trump’s first term. “This time, China will not give in to the threats. And as Xi watches our markets go down, his position is that the US is shooting itself in the foot.”

But Wang Wen, a dean at China’s Renmin University, said the new tensions would be resolved through negotiations.

“China’s countermeasures . . . are advantageous and will ultimately lead to the US returning to the negotiation table,” said Wang.

“China has become accustomed to the ‘paper tiger’ behaviour of the US.”

Tucked away within Punta Mita on Mexico’s Pacific Coast, Naviva is arguably one of the most unique properties within the Four Seasons portfolio. To start, there are just 15 spacious, canvas-covered bungalows ensconced in the resort’s lush landscaping. The large furnished terraces allow you to immerse in the surrounding nature and are decked out with an indoor-outdoor living area, hammock, and plunge pool, with select rooms also boasting a firepit. But what really sets it apart is its luxurious take on an all-inclusive program. All food and drinks are taken care of, including room service and premium wines and spirits, along with a 90-minute spa journey at one of the two standalone pavilions, complete with a barrel hot tub and covered cabana for the perfect post-treatment relaxation. An extensive program of complimentary daily experiences will also assure that you and your guests will be taken care of at all times, whether it be a gratitude temazcal ceremony, fishing for snapper right off the shore, or learning how to make ceviche with the chefs. And when it comes to your big day, there are a few locations to choose from, including the secluded beach, two terraces that overlook the ocean, or, if you want to get creative, at the tiered pool.

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Novae Film and Photo

By Weston Blasi

The hedge-fund billionaire says today’s economic times remind him of the 1970s

A 15% gold portfolio? Ray Dalio think you should have one.

‘If you look at it just from a strategic asset-allocation perspective, you would probably have something like 15% of your portfolio in gold, because it is one asset that does very well when the typical parts of the portfolio go down.’

That was Ray Dalio – the billionaire founder of the world’s largest hedge fund, Bridgewater Associates – discussing how much gold it makes sense for investors to have in their portfolios.

Speaking last Tuesday at the Greenwich Economic Forum in Connecticut, Dalio touted gold (GC00) while comparing the current economic landscape with that of the 1970s.

“It’s very much like the early ’70s. … Where do you put your money in?” he said. “When you are holding money and you put it in a debt instrument, and when there’s such a supply of debt and debt instruments, it’s not an effective storehold of wealth.”

See: Morgan Stanley is opening cryptocurrency investments to all clients. Here’s what percentage of your portfolio should be in crypto.

Generally, gold is seen by some investors as a way to protect against inflation and market volatility, particularly in uncertain economic times. But Dalio’s 15% asset recommendation for gold holdings contrasts with the advice of many financial advisers who tell clients that a 60/40 split between stocks and bonds is optimal, with alternate assets like gold and commodities below a 10% threshold.

“There’s going to be some individuality to each portfolio,” Clifford Cornell, Certified Financial Planner at Bone Fide Wealth told MarketWatch. “Gold is the talk of the town, and it’s been a stellar year for the asset class, and people get FOMO [fear of missing out].”

Cornell does not offer a one-size-fits gold asset-allocation recommendation for clients, but noted 15% is a “pretty hefty allocation.”

Edward Hadad, a financial planner at Financial Asset Management Corp. with over 15 years of experience, is skeptical of Dalio’s comments on the precious metal.

“We advise to equites and bonds – assets that have earnings,” he said. “Gold is not going to pay you dividends. It’s not part of our models.”

If a client wants to have some of their portfolio in gold or alternative assets, Hadad recommends that portion should not exceed more than 5% of the total portfolio. “If somebody wants to speculate, we want to insure the totality of what we manage can still achieve your financial goals,” he said.

Similarly, one of BlackRock’s portfolio managers posted last month that a 2% to 4% strategic allocation for gold is preferred, while Fidelity generally advises a “small percentage” of gold exposure.

Representatives for Dalio did not respond to a request for comment.

Dalio’s comments came as gold prices continue their all-time highs this week, reaching over $4,100 an ounce. Gold prices have spiked over 55% in 2025 amid mounting U.S. fiscal deficits, inflation, bets on falling interest rates and a weaker dollar, among others factors.

Silver prices are also on a track for big gains this year. Comex silver futures SI00 (SI00) (SIZ25) were just below $48 an ounce on Saturday as prices have climbed more than 60% in 2025 to date.

The ICE U.S. Dollar Index DXY, a measure of the dollar against a basket of six major world currencies, is down just under 9% for the year.

Read on: If New York or California enter a recession, the entire U.S. economy would be next. So how are they doing?

-Weston Blasi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  10-11-25 1244ET
Copyright (c) 2025 Dow Jones & Company, Inc.

By Weston Blasi

Morgan Stanley will rely on its automated monitoring processes to make sure clients are not overly exposed to crypto

Crypto goes even more mainstream as Morgan Stanley drops restrictions for its clients.

Financial-services giant Morgan Stanley will start allowing its financial advisers to pitch crypto investments to clients with any type of account, according to a person familiar with the matter.

Prior to this change, which goes into effect Oct. 15, crypto funds were only available to Morgan Stanley (MS) clients with an aggressive risk tolerance and at least $1.5 million in assets with traditional brokerage accounts.

While the move signifies a dramatic shift in the crypto industry, which is further solidifying its presence in the mainstream U.S. investing ecoystem, the question now becomes: What percentage of one’s portfolio does it make sense to have invested in crypto?

“It comes down to the individual,” Clifford Cornell, a certified financial planner at Bone Fide Wealth, told MarketWatch, noting that their clients have been eager to get into crypto. “We have a lot of conversations with clients about bitcoin. It’s one thing clients are really interested in, whether it’s actually allocating or just understanding what it is.”

Generally, Cornell said that if people come to him interested in assets outside of stocks or bonds, then he doesn’t give them a blanket asset-allocation recommendation. Instead, he may suggest setting up a separate growth-investing account – what he calls an “opportunity portfolio” – where those alternate assets can go.

“Maybe it’s more of a trade instead of an investment,” he said. “In those instances, I’d be less concerned with the percentage – whether it’s 90/10, etc. – and more concerned with what we call an opportunity portfolio.

“We never shy away from allowing clients [to invest] if they feel strongly about bitcoin, gold or an individual stock,” he added.

Prices for bitcoin( BTCUSD) reached an all-time high this week of about $126,000, before retreating back to $118,000 on Friday. The digital asset is up over 25% in 2025 to date.

“When we see a stellar year for any individual asset class, I think a lot of people get antsy,” Cornell said, explaining that clients who aren’t invested can feel left behind by a bull run in an asset.

Some other financial advisers were more comfortable giving a recommended allocation percentage for assets like crypto or gold (GC00).

Edward Hadad, a financial planner at Financial Asset Management Corp. with over 15 years of experience, recommends that speculative assets like crypto or gold should not exceed more than 5% of a person’s portfolio.

“If somebody wants to speculate, we want to ensure the totality of what we manage can still achieve your financial goals,” Hadad told MarketWatch.

See: Gold above $4,000: Is it too late to add it to your 401(k)?

And some financial institutions are making their own recommendations, too.

Morgan Stanley’s Global Investment Committee issued a paper in October outlining a recommendation of a maximum crypto allocation of 4%, according to CoinDesk. The committee described crypto as “a speculative and increasingly popular asset class that many investors, but not all, will seek to explore” – comparing bitcoin, specifically, to a scarce asset “akin to digital gold.”

Similarly, BlackRock’s Inc. (BLK) Investment Institute recommended a 1% to 2% allocation to bitcoin in 2024, while three writers from Fidelity’s investment blog suggested that portfolio allocations of 2% to 5% in bitcoin may be appropriate – and even as much as 7.5% for young investors.

Morgan Stanley’s latest crypto changes will also allow for retirement accounts to be exposed to crypto holdings for the first time. The financial planners that spoke to MarketWatch for this story were discussing potential crypto exposure in traditional brokerage accounts, not retirement accounts.

Morgan Stanley will rely on its automated monitoring processes in an effort to make sure clients do not become overly exposed to the volatile digital asset class.

See: Dow shedding over 800 points as U.S. stocks plummet on Trump’s threat of new China tariffs

Read on: Ray Dalio wants investors to have 15% of their portfolios in gold. Here’s what others think of his advice.

-Weston Blasi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  10-11-25 1230ET
Copyright (c) 2025 Dow Jones & Company, Inc.

On Friday, President Donald Trump said he will impose an additional 100% tariff on China and limit U.S. exports of software, after China restricted its exports of rare earths.

The S&P 500 sank 2.7%, its worst selloff since April 10. Meanwhile, the U.S. dollar index plunged nearly 0.7% as Treasury yields fell, while gold prices surged more than 1.5%.

“Markets are again thinking that the US holds the shorter straw in the tariff fight with China,” Robin Brooks, a senior fellow at the Brookings Institution, wrote on Substack on Saturday.

China has a stranglehold on rare earths, producing more than 90% of the world’s processed rare earths and rare earth magnets. That has served as a key source of leverage over the U.S.

The divergence between the dollar and gold is notable because stock market selloffs historically have sent investors to the dollar as a safe haven.

But just like in the fallout from Liberation Day, that dollar pattern didn’t hold, and gold instead was the preferred refuge from trade war chaos.

Brooks pointed out that the dollar had been stable in recent weeks even as gold prices soared, notching record high after record high. That ended with Friday’s China tariff announcement from Trump.

“This is now the second instance where markets are trading tariffs as backfiring on the US, not on the rest of the world,” he added.

Considering how stocks, currencies and gold reacted on Friday, Brooks said the overall picture is that the dollar actually looks more vulnerable now than it did in early April.

In particular, he pointed to how much the dollar fell when weighed alongside the steep drop in stocks, which ordinarily boosts the greenback amid a flight to safety.

“The fact that this didn’t happen and that gold prices rose more than on ‘Liberation Day’ is concerning,” Brooks warned. “The Dollar is not looking healthy.”

Before the tariff flare-up, U.S.-China trade talks had been progressing after Trump reached deals with the European Union, Japan, South Korea and other top trading partners. 

But tensions remained, including on the issue of rare earths while the U.S. had moved to restrict other countries’ exports of semiconductor-related products to China.

Also this week, the U.S. announced port fees on Chinese ships, prompting Beijing to impose a similar fee on U.S. ships docking at Chinese ports. China also launched an antitrust investigation into U.S. chipmaker Qualcomm.

Then on Thursday, China’s commerce ministry said that starting on Dec. 1 a license will be required for foreign companies to export products with more than 0.1% of rare earths from China or that are made with Chinese production technology.

“In other words, the United States can cut China off from the chips of today, but China can make it vastly harder to build the chips and other advanced technologies of tomorrow,” Michael Froman, president of the Council on Foreign Relations and a former U.S. Trade Representative, said in a post on Friday.

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AI agents, software systems that use AI to pursue goals and complete tasks on behalf of users, are proliferating. Think of them as digital assistants that can make decisions and take actions towards goals you set without needing step-by-step instructions — from GPT-powered calendar managers to trading bots, the number of use cases is expanding rapidly. As their role expands across the economy, we have to build the right infrastructure that will allow these agents to communicate, collaborate and trade with one another in an open marketplace.

Big tech players like Google and AWS are building early marketplaces and commerce protocols, but that raises the question: will they aim to extract massive rents through walled gardens once more? Agents’ capabilities are clearly rising, almost daily, with the arrival of new models and architectures. What’s at risk is whether these agents will be truly autonomous.

Autonomous agents are valuable because they unlock a novel user experience: a shift from software as passive or reactive tools to active and even proactive partners. Instead of waiting for instructions, they can anticipate needs, adapt to changing conditions, and coordinate with other systems in real time, without the user’s constant input or presence. This autonomy in decision-making makes them uniquely suited for a world where speed and complexity outpace human decision-making.

Naturally, some worry about what greater decision-making autonomy means for work and accountability — but I see it as an opportunity. When agents handle repetitive, time-intensive tasks and parallelize what previously had to be done in sequence, they expand our productive capacity as humans — freeing people to engage in work that demands creativity, judgment, composition and meaningful connection. This isn’t make-believe, humanity has been there before: the arrival of corporations allowed entrepreneurs to create entirely new products and levels of wealth previously unthought of. AI agents have the potential to bring that capability to everyone.

On the intelligence side, truly autonomous decision-making requires AI agent infrastructure that is open source and transparent. OpenAI’s recent OSS release is a good step. Chinese labs, such as DeepSeek (DeepSeek), Moonshot AI (Kimi K2) and Alibaba (Qwen 3), have moved even quicker.

However, autonomy is not purely tied to intelligence and decision making. Without resources, an AI agent has little means to enact change in the real world. Hence, for agents to be truly autonomous they need to have access to resources and self-custody their assets. Programmable, permissionless, and composable blockchains are the ideal substrate for agents to do so.

Picture two scenarios. One where AI agents operate within a Web 2 platform like AWS or Google. They exist within the limited parameters set by these platforms in what is essentially a closed and permissioned environment. Now imagine a decentralized marketplace that spans many blockchain ecosystems. Developers can compose different sets of environments and parameters, therefore, the scope available to AI agents to operate is unlimited, accessible globally, and can evolve over time. One scenario looks like a toy idea of a marketplace, and the other is an actual global economy.

In other words, to truly scale not just AI agent adoption, but agent-to-agent commerce, we need rails that only blockchains can offer.

AWS recently announced an agent-to-agent marketplace aimed at addressing the growing demand for ready-made agents. But their approach inherits the same inefficiencies and limitations that have long plagued siloed systems. Agents must wait for human verification, rely on closed APIs and operate in environments where transparency is optional, if it exists at all.

To act autonomously and at scale, agents can’t be boxed into closed ecosystems that restrict functionality, pose platform risks, impose opaque fees, or make it impossible to verify what actions were taken and why.

An open ecosystem allows for agents to act on behalf of users, coordinate with other agents, and operate across services without permissioned barriers.

Blockchains already offer the key tools needed. Smart contracts allow agents to perform tasks automatically, with rules embedded in code, while stablecoins and tokens enable instant, global value transfers without payment friction. Smart accounts, which are programmable blockchain wallets like Safe, allow users to restrict agents in their activity and scope (via guards). For instance, an agent may only be allowed to use whitelisted protocols. These tools allow AI agents not only to behave expansively but also to be contained within risk parameters defined by the end user. For example, this could be setting spending limits, requiring multi-signatures for approvals, or restricting agents to whitelisted protocols.

Blockchain also provides the transparency needed so users can audit agent decisions, even when they aren’t directly involved. At the same time, this doesn’t mean that all agent-to-agent interactions need to happen onchain. E.g. AI agents can use offchain APIs with access constraints defined and payments executed onchain.

In short, decentralized infrastructure gives agents the tools to operate more freely and efficiently than closed systems allow.

While centralized players are still refining their agent strategies, blockchain is already enabling early forms of agent-to-agent interaction. Onchain agents are already exhibiting more advanced behavior like purchasing predictions and data from other agents. And as more open frameworks emerge, developers are building agents that can access services, make payments, and even subscribe to other agents – all without human involvement.

Protocols are already implementing the next step: monetization. With open marketplaces, people and businesses are able to rent agents, earn from specialized ones, and build new services that plug directly into this agent economy. Customisation of payment models such as subscription, one-off payments, or bundled packages will also be key in facilitating different user needs. This will unlock an entirely new model of economic participation.

Without open systems, fragmentation breaks the promise of seamless AI support. An agent can easily bring tasks to completion if it stays within an individual ecosystem, like coordinating between different Google apps. However, where third-party platforms are necessary (across social, travel, finance, etc), an open onchain marketplace will allow agents to programmatically acquire the various services and goods they need to complete a user’s request.

Decentralized systems avoid these limitations. Users can own, modify, and deploy agents tailored to their needs without relying on vendor-controlled environments.

We’ve already seen this work in DeFi, with DeFi legos. Bots automate lending strategies, manage positions, and rebalance portfolios, sometimes better than any human could. Now, that same approach is being applied as “agent legos” across sectors including logistics, gaming, customer support, and more.

The agent economy is growing fast. What we build now will shape how it functions and for whom it works. If we rely solely on centralized systems, we risk creating another generation of AI tools that feel useful but ultimately serve the platform, not the person.

Blockchain changes that. It enables systems where agents act on your behalf, earn on your ideas, and plug into a broader, open marketplace.

If we want agents that collaborate, transact, and evolve without constraint, then the future of agent-to-agent marketplaces must live onchain.

Person holding their lower back because of pain

getty

Back pain is the world’s leading cause of disability, affecting more than 619 million people globally, according to a 2020 report from the World Health Organization. Few conditions have such a wide range of causes — from temporary muscle spasms to terminal metastatic cancer. While back pain is often fleeting and mild, there are key signals that help physicians distinguish between benign and more serious causes.

I spoke with Dr. Lindsey Ross, a neurosurgeon who specializes in the spine, about the truths and misconceptions around back pain. She also shared how A.I. technology is reshaping the future of spine care.

Common Causes of Back Pain

According to the Mayo Clinic, the most common causes of back pain include muscle or ligament strain, which can occur from lifting or sudden movements; bulging or ruptured disks, where the cushions between vertebrae press on nerves; arthritis, which can lead to a narrowing of the space around the spinal cord; osteoporosis, or weakened bones that can fracture; and ankylosing spondylitis, a chronic spinal inflammatory disease.

Lifestyle choices, Ross adds, play a major role in both the development and persistence of back pain. Obesity, sedentary habits, and heavy manual labor all increase risk. Many patients believe resting in bed or on the couch will alleviate their back pain. Ironically, inactivity often worsens pain over time. “Patients who are very sedentary tend to have more back pain,” Ross says.

This can create a loop where pain limits activity, inactivity weakens muscles, and weaker muscles worsen the pain. Escaping this “pain cycle,” she explains, requires gradual, guided movement and addressing the mental side of chronic pain. “It’s hard to get out of this cycle.”

When Back Pain Could Signal Something Serious

Many patients—especially those with new, persistent back pain—worry that their symptoms could signal something more serious, like cancer, fractures, or infection. It is important not to ignore these symptoms particularly if they have never been evaluated by a physician.

Portrait of Dr. Lindsey Ross

Kerry James

General warning signs include personal or family history of cancer, unexplained weight loss, persistent fatigue, age over 50, and pain that worsens at night. Pain that isn’t clearly linked to posture, movement, or activity —”especially pain that wakes you at night — should be evaluated.” Most pain related to arthritis or aging should not worsen when you are resting in bed, Ross notes.

Urgent red-flag symptoms that require immediate medical attention include new weakness or numbness in the limbs, difficulty walking or maintaining balance, loss of bladder or bowel control, high fever, or a history of intravenous drug use. These may indicate serious spinal pathology and should prompt emergency evaluation. In the ER, a physician will take a history, perform a physical exam, and determine whether imaging or urgent consultation with a spine specialist is needed. “Conditions that cause loss of function are time-sensitive,” Ross emphasizes. “They must be addressed immediately to restore functionality.”

When To Get Imaging for Your Back Pain

Even when imaging is considered, restraint is important. 75% of people in developed countries will experience some sort of back pain in their life, and “most times the pain will improve with rest and conservative treatment,” says Ross. MRI or CT scans are typically warranted only if pain lasts longer than three months or if general warning signs or urgent red-flag symptoms appear.

Ross cautions that unnecessary imaging can reveal incidental findings, which may lead to unnecessary procedures. She recalls one patient who had a CT scan for kidney stones that incidentally revealed a benign nerve tumor. “She did not have back pain, but after the biopsy she developed severe pain that radiated down her legs,” she says. “All procedures and interventions have risk, even if very small.”

For new, mild back pain without red-flags, a primary care physician is usually a safe first stop. Ross often sees patients who don’t need surgery but benefit from a spine specialist’s guidance toward “the correct and evidence-based care.”

Non-Surgical Treatment of Back Pain

Ross emphasizes that there are many proven, nonsurgical options for managing back the majority of back pain cases. These include improving posture and ergonomics, building core strength through physical therapy, and exploring complementary approaches such as chiropractic manipulation, acupuncture, and massage. Short-term use of anti-inflammatory medications or muscle relaxants can also help.

One study found that cognitive behavioral therapy (CBT), a form of talk therapy, and has shown supportive evidence for improving pain, disability, fear avoidance, and self-efficacy in patients with chronic low back pain. Ross herself has conducted research using virtual reality platforms to deliver CBT remotely, an approach she says has been successful and is now FDA-approved for patients with chronic low back pain.

Surgical Treatment of Back Pain using AI

Dr. Lindsey Ross in the operating room

Dr. Lindsey Ross

When conservative measures are ineffective or insufficient, surgery may be an option. It is important for patients to have reasonable expectations, however. Not every patient will improve after surgery. One study found that over two years, recurrent disc herniation occurred in up to 23% of patients and reoperation rates ranged from up to 13%.

Recovery can range from six weeks for a simple procedure to many months for complex spinal reconstructions. Ross shares that there are efforts to decrease downtime for patients. “Minimally invasive techniques such as the use of tubes, endoscopy and small incisions tend to be associated with quicker recoveries. Artificial disc replacements which maintain motion in the spine often have a quicker recovery than fusion surgeries.”

Ross says the operating room itself is changing fast. “We are in the age of artificial intelligence and robots,” she notes. “Most major spine centers and hospitals have a spine robot.” These tools assist in precise screw placement, improving safety and reducing surgeon fatigue. Artificial intelligence also helps plan hardware positioning and may eventually guide surgeons toward the best approach for each patient’s anatomy and biology.

The Bigger Picture

Back pain isn’t just a personal health issue—it’s an economic one. About three million people are chronically disabled by low back pain, leading to an estimated 149 million lost workdays each year.

Despite those numbers, Ross says many patients still overlook the most effective solutions: movement, education, and consistent self-care. “While only a small percentage of patients are appropriate candidates for spine surgery,” she says “many overlook evidence-based approaches to back pain management.” Education and lifestyle modifications — such as exercise, weight management, and activity adjustments — can lead to significant improvement for many.

Ross reminds us most back pain is not life or limb threatening and can improve without surgery. Knowing when to act—and when to seek urgent help—can make all the difference.

By Philip van Doorn

The S&P 500’s record concentration to a handful of stocks and a high overall valuation to earnings make a case for broadening your investment portfolio

A high concentration to a small number of stocks and a high valuation to estimated profits are similar to the S&P 500’s position before end of the dot-com bubble in 2000.

Frequent headlines about stock indexes hitting record highs don’t mean very much when we are in a bull market, as steady economic growth can fuel overall stock-market growth. But the S&P 500’s valuation relative to its components’ expected profits is currently high, and the index’s gain is more concentrated to a small number of companies than it has been at any time for at least 53 years, according to analysts at Ned Davis Research.

This means that a strategy of having a lot of money in an S&P 500 index SPX fund may be more risky than you realize.

The idea of holding 500 stocks rather than a few that you select can be comforting, especially when the index has been such a strong performer over recent years.

Another advantage with an index fund is low expenses. The SPDR S&P 500 ETF Trust SPY – the oldest exchange-traded fund tracking the large-cap U.S. benchmark index – has annual expenses of 0.0945% of assets under management. This makes for an annual fee of $9.45 for a $10,000 investment. And some S&P 500 index funds are even less expensive. The Vanguard S&P 500 ETF VOO and the iShares Core S&P 500 ETF IVV, to name two examples, have expense ratios of 0.03%.

Higher concentration risk

In a recent research report, Ned Davis analysts Rob Anderson and Thanh Nguyen summarized the action within the S&P 500 during September. “The megacap strength was evident in rising market concentration, with the top 10 stocks surpassing 40% of S&P 500 market cap for the first time since at least 1972,” they wrote. The index rewards success.

If we look at the current list of holdings for the SPDR S&P 500 ETF Trust, we see that the “top 10” really includes 11 stocks, because Google holding company Alphabet Inc. (GOOGL) (GOOG) has two common share classes in the index.

   Company                           Ticker   % of SPY portfolio  Two-year revenue CAGR through calendar 2024  Forward P/E 
   Nvidia Corp.                     NVDA                    8.0%                                       113.0%         32.3 
   Microsoft Corp.                  MSFT                    6.7%                                        13.3%         31.8 
   Apple Inc.                       AAPL                    6.7%                                         1.1%         32.1 
   Amazon.com Inc.                  AMZN                    3.7%                                        11.4%         29.7 
   Broadcom Inc.                    AVGO                    2.8%                                        25.5%         37.2 
   Meta Platforms Inc. Class A      META                    2.7%                                        18.8%         24.0 
   Alphabet Inc. Class A            GOOGL                   2.5%                                        11.6%         23.3 
   Tesla Inc.                       TSLA                    2.1%                                         9.5%        185.4 
   Alphabet Inc. Class C            GOOG                    2.0%                                        11.6%         23.4 
   Berkshire Hathaway Inc. Class B  BRK.B                   1.6%                                        10.9%         23.4 
   JPMorgan Chase & Co.             JPM                     1.5%                                        33.7%         15.0 
                                                                                            Sources: State Street, FactSet 

These 11 stocks of 10 companies now make up 40.3% of the SPY portfolio.

The S&P 500 is weighted by market capitalization. This means a stock with a $1 trillion market cap will have 10 times the weighting as one with a $100 billion market cap.

The table includes compound annual growth rates for the companies’ revenue through 2024. The figures were adjusted for calendar years by FactSet for companies whose fiscal years don’t match the calendar. The astounding growth of Nvidia’s (NVDA) business explains why it is now at the top of the S&P 500 weighting.

All of the sales CAGR figures for the 10 companies with the heaviest weighting in the S&P 500 far outpaced the index’s weighted two-year revenue CAGR of 3.7%, with the exception of Apple (AAPL).

Higher valuation risk

The right-most column of the table above shows forward price-to-earnings valuations for the stocks. These are Friday’s closing prices divided by consensus earnings-per-share estimates for the next 12 months among analysts polled by FactSet.

In comparison, the S&P 500’s weighted forward price/earnings ratio is 23. That is the highest it has been since early 2021, when the index’s forward P/E was slightly higher. The index’s highest forward P/E over the past 20 years was 24.25 early in September 2020, when earnings estimates were still depressed for some industries because of the COVID-19 pandemic.

The index hasn’t traded much higher than its current valuation since March 2000, when its forward P/E peaked at 26.2, according to FactSet. That was right before the dot-com bubble began to deflate.

Putting the two risks together

During the dot-com bubble, the S&P 500 crested on March 24, 2000. From that date through Oct. 9, 2022, the index declined 47.4% with dividends reinvested.

From a dot-com-bubble closing peak at 1,527.46 on March 24, 2000, the S&P 500 fell 49.1% through its closing trough at 776.76 on Oct. 9, 2002. With dividends reinvested, the index’s total return for that period was minus 47.4%.

And on March 24, 2000, before the dot-com bubble burst, the S&P 500 was 29.2% concentrated to its largest 10 component companies, according to Ned Davis Research. That was significantly less concentration than we have today.

So the current combination of a high P/E and very high concentration indicate a high level of risk for the S&P 500. And if you are of the opinion that the current stock boom that has been fed by anticipation of a pot of gold after massive spending on data centers, equipment and staff to develop generative artificial intelligence isn’t likely to be supported by AI-driven earnings, maybe you should lower your exposure to the cap-weighted S&P 500.

Read: This is the critical detail that could unravel the AI trade: Nobody is paying for it.

There are various weighting schemes that mutual funds and ETFs follow for investors who wish to stick with the S&P 500 but lower their concentration risk. Factors can include an equal weighting, a value focus such as lower P/E, momentum, dividend growth and many more, including combinations of factors.

Even more diversification might be appropriate for you

There is no question that a strategy of sticking with the cap-weighted S&P 500 for very long periods has worked out well. But you should think about your investment objectives and your time frame, both of which change over the years. Then put on your short-term thinking cap for a moment. How did you feel earlier this year when the S&P 500 dropped 19% from 6,144.15 on Feb. 19 to 4,982.77 on April 8? That turned out to be a temporary decline, and the S&P 500 has returned 15.3% for 2025 through Friday.

Now think back to how you felt during the heat of the sharp decline for the S&P 500 through April 8. Did you wish you had a more diversified – or less risky – portfolio?

Depending on your thought process, time horizon and objectives (such as eventually producing income with your portfolio), this could mean adding exposure to bonds as well as having a less concentrated equity portfolio.

Mark Hulbert spelled this out in an article about investment-portfolio diversification last week: “In the past, when the market was overvalued as it is now, a 60/40 portfolio almost always beat the S&P 500 over the subsequent decade.”

Click on the tickers for more about each company, index or ETF in this article.

Read: Tomi Kilgore’s detailed guide to the information available on the MarketWatch quote page

Don’t miss: 10 stocks that not only beat the S&P 500 but also grew their dividends the most

-Philip van Doorn

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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