特朗普拟设“政府效率部”，马斯克入局，投资者须了解六件事

Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the SP 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest MA in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.

Trump has chosen Musk and billionaire entrepreneur Ramaswamy to jointly lead the "Department of Government Efficiency", which may be a sign that Musk will hold an important position in the White House, ultimately becoming a bullish factor for Tesla.

On Tuesday evening (November 12), the elected president of the USA, Trump, announced that Tesla CEO Elon Musk and former Republican presidential candidate Vivek Ramaswamy will lead the proposed "Department of Government Efficiency" (DOGE), the abbreviation DOGE is the token symbol of dogecoin that Musk has frequently talked about in the past.

What is the "Department of Government Efficiency"?

Trump stated in a declaration: "These two excellent Americans will work together to eliminate government bureaucracy, reduce excessive regulation, cut wasteful spending, and pave the way for reorganizing federal institutions under my leadership."

Trump mentioned that Musk and Ramaswamy will provide "advice and guidance" and collaborate with the White House Office of Management and Budget with the aim of creating a "small government that is more efficient and less bureaucratic."

It is worth noting that the establishment of a new government department requires approval from the US Congress; otherwise, the "Department of Government Efficiency" will merely be a nominal department, similar to a consulting firm.

Trump compared this proposal to the "Manhattan Project." The "Manhattan Project" was a research program during World War II that was responsible for developing the first nuclear weapons.

Musk stated in a statement: “This will create shockwaves for the entire system and for many involved in government waste.”

How would Musk improve government efficiency.

In August this year, Musk publicly proposed the idea of establishing a government efficiency committee to Trump on social media X for the first time, and said he "would be happy to help." Musk stated that the goal of establishing such a department is to ensure that "taxpayer dollars are spent in the right places."

In October, while campaigning for Trump in Lancaster, Pennsylvania, Musk said, "We will adhere to an open and transparent approach, clearly telling people what we intend to do, which will involve some quite significant initiatives."

So far, Musk has not specifically revealed what measures will be taken, but from the information already disclosed, he may cut the usa government budget by about 2 trillion dollars. As of the last fiscal year ending in September, the usa government spent a total of 6.8 trillion dollars.

Musk also expressed support for reducing regulation, which has been a long-standing proposal by Trump. Musk wrote on X on Wednesday: "We have finally been authorized to abolish a large number of oppressive regulatory measures that do not serve the interests of usa society."

Other ideas raised by Musk on X include providing incentives for "smart spending" and targeting non-governmental organizations that frequently receive government funding, which he wrote are "completely illegal branches of the government."

To gather more ideas for spending cuts, Ramaswamy, who is nominated to lead the "Department of Government Efficiency" along with Musk, wrote on X that the department will solicit examples of government waste, fraud, and abuse from the public.

Who is Ramaswamy? What will his joining bring?

Billionaire entrepreneur Ramaswamy received praise from Musk when he participated in the Republican presidential candidate campaign in 2023, when Musk called him "a candidate with a bright future."

Ramaswamy is also connected to J.D. Vance, who is from Ohio and was elected vice president; the two met and became friends at Yale Law School. Ramaswamy holds a bachelor’s degree in biology from Harvard University and claims to be a "scientist." He is a co-founder of the biotechnology company Roivant Sciences (ROIV) and holds about 7% of the company’s shares. He is also a co-founder of an asset management company in Columbus, Ohio.

During the Republican presidential candidate campaign, Ramaswamy's campaign slogan was "truth," which included his claims that "capitalism lifts people out of poverty" and that the Constitution "is the most powerful safeguard of freedom in history."

Recently, Ramaswamy became an activist investor in BuzzFeed, acquiring 8.6% of the company. In addition to demanding that more conservatives have a voice on BuzzFeed, he also advocates for a complete reform of the media company, a stance similar to Trump’s call for increased government efficiency.

In May of this year, Ramaswamy wrote in a letter to the BuzzFeed board of directors: "Mild measures won’t work; every piece of content produced by the company must be fundamentally rethought."

This Wednesday, Ramaswamy emphasized this point again when he wrote on X: "Mild penalties on the bureaucracy won’t solve the problem; the only right move is massive layoffs."

What is the "Manhattan Project"?

The "Manhattan Project" was a top-secret program aimed at developing the atomic bomb used in World War II, marking the beginning of the nuclear age and the subsequent arms race. With the efforts of scientists, including renowned theoretical physicist J. Robert Oppenheimer, the USA became the first country in the world to develop and successfully deploy nuclear weapons.

On the morning of August 6, 1945, an American B-29 bomber dropped an atomic bomb weighing 9,700 pounds, fueled by uranium and named "Little Boy," on Hiroshima, Japan. According to historical records from the US Department of Energy, American pilot Paul Tibbets reflected on the Hiroshima event, stating, "The incredibly high mushroom cloud engulfed the city." It is estimated that 0.07 million people died on the spot.

Three days later, the USA dropped the second atomic bomb, known as "Fat Man," on Nagasaki, with an initial estimated death toll of about 0.04 million. The next day, Japan surrendered, and World War II officially ended on September 2, 1945, a day also known as "Victory over Japan Day" (V-J Day).

However, the arms race had just begun, as the Soviet Union successfully detonated its first atomic bomb in 1949. The geopolitical tensions during the Cold War between the USA and the Soviet Union, along with their respective allies, persisted until the Soviet Union's dissolution in 1991, with the USA spending billions of dollars, evidently disconnected from "government efficiency."

How long will Musk and Ramaswamy's terms last?

Trump stated that the work of the "Department of Government Efficiency" will conclude on July 4, 2026, which is the 250th anniversary of American independence.

Trump wrote on X, "A more efficient, less bureaucratic small government would be a perfect gift for America's 250th anniversary of independence. I believe they (Musk and Ramaswamy) will succeed!"

How will Tesla's stocks be affected?

Whether Musk's new role will bring trouble to Tesla is something investors need to observe and determine next. From the current reaction in the stock market, they seem to believe that Tesla will not encounter troubles, as Tesla's stock rose by 0.53% to $330.24 on Wednesday.

Tesla's investors occasionally face the issue of management being distracted. When Musk acquired Twitter (now X), Tesla's stock performed poorly. At the beginning of 2024, a judge declared Musk's 2018 compensation plan invalid, raising questions again about whether Musk can focus on Tesla while he is setting up his ai company xAI.

What is different this time is that Ramaswamy will share some of the work, which may be bullish for Tesla's investors. More importantly, many Wall Street analysts believe that reduced regulation could also benefit Tesla and SpaceX's operation.

Wedbush analyst Dan Ives wrote in a research report published on Tuesday: "Since it is not a formal department, nor a government position, and is newly established, Musk's position at Tesla and SpaceX will not change."

Ives stated: "We see another sign that Musk will hold an important seat in the White House, and ultimately this will become bullish for Tesla; we expect Trump to quickly advance proposals related to autonomous driving and ai within the next 12 to 18 months."

Ives' rating for Tesla stocks is "buy", with a target price of $400.

However, Tesla may also encounter headwinds. Carl Tobias, a law professor at the Williams School of the University of Richmond, said: "Among Musk's many business investments, most have obvious conflicts. The 'Department of Government Efficiency' may have to deal with some establishment federal agencies, which Musk despises for their rules and bureaucratic style, often clashing and litigating with these agencies."

Editor/Lambor