by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Good morning! The market is eagerly awaiting fresh consumer sentiment data to assess the strength of the US economy post-election. In sports, Shohei Ohtani of the Los Angeles Dodgers and Aaron Judge of the New York Yankees have been named MVPs of their respective leagues. Today’s Comment begins with an overview of Trump’s supply-side economics. We then provide an analysis of regulators’ increasing scrutiny of Big Tech and take a look at Mexico’s sudden policy shift. As always, the report concludes with a roundup of key international and domestic data releases.

Trumpian Supply Side: The Trump administration plans to reshape supply-side economics to align with a more populist agenda.

• The incoming administration intends to stimulate economic growth through a series of tax cuts and deregulation. Businesses anticipate a corporate tax rate reduction from 21% to 15%, while individual taxpayers also expect tax relief. As far as deregulation is concerned, the financial industry, in particular, has already seen some benefits. In preparation for the transition, federal regulators under President Biden announced on Thursday that they would not finalize any new bank capital rules. Additionally, SEC Chair Gary Gensler, a villain in cryptocurrency circles, has also agreed to resign from his position.
• A key distinction between the original supply-side economists and their contemporary counterparts lies in their approach to trade policy. The current group advocates for the imposition of trade barriers, arguing that this strategy will attract more foreign direct investment. By erecting barriers to trade, they believe that foreign firms will be compelled to establish operations within the US to avoid tariffs, thereby facilitating the transfer of goods into the country duty-free. Japanese automakers used this strategy to avoid tariffs (also called “tariff jumping”) in the 1980s by building factories across the southern US.

• While tariff jumping can stimulate domestic manufacturing, it often leads manufacturers to prioritize countries with US free trade agreements. Mexico and Vietnam are prime examples of this, and could benefit significantly from increased US-China trade tensions. This trend may explain the support for blanket tariffs to prevent any country from exploiting loopholes. However, given the administration’s other priorities — tax cuts for households and businesses and deregulation — a broad-based tariff policy may not take precedence.

Google Breakup: US regulators have requested that the court force Google to sell its Chrome web browser business.

• Following a court ruling that found the company guilty of monopolizing the search engine industry, the Department of Justice has requested that it sell its Chrome browser business. The DOJ had sued the tech giant, alleging that it used unfair trade practices to harm competitors. While the Android business was also considered for divestiture, regulators ultimately decided against it. They reasoned that the threat of future divestiture could be sufficient to deter the company from further anti-competitive behavior.
• If successful, this would mark the first time a major company has been forced to undergo an antitrust breakup since AT&T in 1982. Over the past three to four decades, the court system has adopted the so-called “Bork standard,” which allows companies to form monopolies as long as they can demonstrate consumer benefits. In essence, the government has permitted major companies, particularly in the tech industry, to consolidate, provided that it leads to increased efficiency. This shift played a role in the disinflationary trend we have seen in recent decades as it forced many firms to prioritize cost leadership.

• The “Bork Standard,” a once-dominant antitrust framework, has increasingly become outdated. In today’s tech-driven economy, mature, inefficient firms are rare. Now, mergers and acquisitions often target innovative startups or smaller competitors. This trend can lead to heightened market concentration, stifling competition, and ultimately harming consumers. While we expect Google to appeal the recent antitrust ruling, both Google and other tech giants may face intensified regulatory scrutiny. As a result, the Magnificent 7 remain vulnerable to antitrust risks.

Mexico Backtracks: Mexico’s recent court system reforms may face implementation delays as the government seeks to temper potential backlash from both investors and the US.

• To ensure compliance with the USMCA agreement, the lower house of Congress has proposed modifying recent reforms. These changes that originally aimed to dismantle multiple regulatory bodies, including the transparency institute, the antitrust body, and the telecom overseer, have faced significant scrutiny. The elimination of the telecom overseer, in particular, has been identified as a potential violation of the agreement. To address this issue, lawmakers propose merging the antitrust and telecom regulators into a single entity, which has been viewed positively by investors.
• The Mexican peso (MXN) has depreciated 7% against the dollar over the past three months. Investors are increasingly concerned about the country’s recent constitutional reforms, which would empower the ruling Morena party to appoint favorable judges. This has raised fears of unchecked power and potential policy overreach. Additionally, the incoming US administration’s increased scrutiny of Mexico’s policies, particularly its openness to Chinese investment, has added to investor worries. Last week, Moody’s downgraded Mexico’s outlook from stable to negative, citing these policy concerns.

• The market will be closely watching the relationship between the new US and Mexican presidents in the coming years. With the USMCA up for review in 2026, Trump is expected to push for changes to protect US interests from Mexico’s constitutional reforms and to close loopholes that allow other countries to bypass tariffs by operating in Mexico to export to the US. However, Mexican President Claudia Sheinbaum has yet to signal her stance on Trump’s concerns. This uncertainty surrounding potential revisions to the agreement is likely to introduce volatility to the Mexican peso and equity markets.

In Other News: NATO and Ukraine will convene emergency talks to discuss the use of Russian hypersonic missiles as concerns grow over escalating tensions. Meanwhile, President-elect Donald Trump’s nominee for Attorney General, Matt Gaetz, has withdrawn from consideration, highlighting resistance from Republican senators to some of the president’s appointees.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Good morning! Markets are digesting Nvidia’s earnings report. In sports, Caitlin Clark has declined an offer to play in the Unrivaled three-on-three basketball league. Today’s Comment will cover Nvidia’s impact on the AI rally, the unintended consequences of trade restrictions, and updates on the Ukraine war. We’ll wrap up with a roundup of international and domestic data releases.

Nvidia’s Momentum: Spending on building AI-related infrastructure by Big Tech companies remains strong but is showing signs of waning.

• On Wednesday, Nvidia reported earnings that were nearly double the previous year’s, but still disappointed investors as it barely beat expectations. Fourth-quarter sales of $47.5 billion slightly exceeded estimates of $47.1 billion. While the modest beat suggests continued strong demand for the company’s products, concerns have emerged about the sustainability of its current growth trajectory. As investors assess the outlook for the AI-fueled rally that has propelled the S&P 500 to new highs, doubts have grown about its ability to carry over to next year.
• As a leading AI player, Nvidia has significantly benefited from the technology’s rapid adoption and is now a key industry barometer. Big Tech companies like Google, Amazon, Meta, and Microsoft rely on Nvidia’s high-performance chips to build and maintain their vast and complex data infrastructures. As a result, strong Nvidia earnings are often seen as a positive indicator of these tech giants’ continued investment in AI and cloud computing. According to Bloomberg Intelligence, capex spending by Big Tech firms is on pace for $165.2 billion this year, up from $120 billion last year.

• While AI advancements have been a catalyst for the Magnificent 7’s growth, a significant portion of their recent momentum can be attributed to investor demand for higher returns. In an environment of elevated interest rates, investors have sought out large, established companies with strong growth potential. These tech giants, with their substantial financial resources and low risk of insolvency, are perceived as attractive investments capable of capturing market share through aggressive spending. As these stocks become more expensive, small and mid-cap stocks could become more appealing to investors.

Imports, Tariffs, and Yields: Firms have started to ramp up their purchases of imports as they look to get ahead of potential tariffs from the incoming administration.

• West Coast ports, such as Long Beach and Los Angeles, have experienced a significant increase in activity as investors and businesses seek to mitigate the potential impact of future trade restrictions. Last month, the Port of Long Beach handled nearly 1 million containers, surpassing records set two months ago. Together, the ports of Long Beach and Los Angeles account for approximately one-third of all US container imports and are expected to remain busy through the end of the year as companies build up inventory to safeguard against potential supply chain disruptions.
• Firms are increasing foreign purchases to preempt potential tariffs from the incoming administration. Deficit nations rely on foreign capital, while surplus nations provide it. Consequently, resolving a trade dispute involves altering the flow of capital. This could manifest in the US borrowing less from the rest of the world by issuing fewer Treasurys or global investors reducing their Treasury holdings. We observed the latter dynamic in October when markets began to anticipate a Trump victory, leading to increased Treasury yields as foreign investors, particularly in Japan and China, reduced their holdings.

• Although Treasury yields are influenced by various factors, including monetary policy, economic outlook, and inflationary expectations, we believe a potential trade war could significantly impact the bond market. Increased tariffs could strengthen the US dollar, making it more expensive for foreign countries to purchase US goods. To acquire the necessary dollars for these imports, these countries may be forced to liquidate their US Treasury bond holdings. The lack of demand for US Treasurys could exacerbate an existing supply-demand imbalance, potentially leading to higher Treasury yields in 2025.

Tensions on the Rise: As Ukraine’s defensive efforts against Russia intensify, the geopolitical implications of the conflict are broadening.

• A Danish naval encounter earlier this week revealed that the ships involved in severing two undersea communication cables in the Baltic Sea were of Chinese origin. Notably, the crews aboard those vessels were reportedly Russian. While China’s support for Russia’s war effort has been widely speculated, this incident provides concrete evidence of direct Chinese involvement, including the supply of critical equipment. The sabotage comes amongst threats from Russia that it views NATO’s assistance to Ukraine as proof of its involvement in the war.
• After Ukraine employed US-supplied weapons in attacks within Russian territory, Moscow intensified its rhetoric, including explicit nuclear threats. Last night, Russia escalated further by launching an intercontinental ballistic missile at Ukraine. While armed with conventional explosives, the missile’s nuclear capability underscores the growing risk of nuclear escalation. In response to this attack, Ukraine deployed specialized UK-supplied missiles to target military installations in the region.

• The escalating geopolitical tensions present a significant risk to global markets. As hostilities intensify, commodity markets, particularly crude oil, are experiencing heightened volatility. Brent crude oil prices have surged 3.1% over the past five days, driven by concerns of potential supply disruptions. Should the conflict escalate further, oil prices could climb toward $80 per barrel by December, exerting inflationary pressure on global economies and weighing on economic growth. Additionally, European equities may face downward pressure due to the region’s proximity to the conflict.

In Other News: The International Criminal Court has charged Israeli President Benjamin Netanyahu with war crimes, a move likely to spark conflict with the US, which has threatened sanctions in response. The Department of Justice has requested that Google sell its Chrome browser in what is shaping up to be one of the biggest anti-trust fights of this century. Bitcoin exceeded $98,000 after news that the Trump administration is considering the appointment of a cryptocurrency czar.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Good morning! Markets are eagerly awaiting Nvidia’s earnings report, due to be released later today. In sports, the Boston Celtics ended the Cleveland Cavaliers’ winning streak. Today’s Comment will cover potential candidates for US Treasury secretary, the role of high-income earners in driving US consumption, and our insights on the escalating conflict in Ukraine. As always, we’ll include a comprehensive roundup of international and domestic data releases.

The Battle for the Treasury: While Scott Bessent is viewed as the front-runner to take over the Treasury, the market is hoping that former Fed Governor Warsh will get the job.

• While Trump has been naming candidates for key roles in his administration, market attention has largely centered on who will lead the US Treasury. Howard Lutnick, previously a top contender, is out of the race after accepting the Commerce secretary role, narrowing the field to Kevin Warsh and Scott Bessent. Warsh, once considered for the Federal Reserve chair, is a key advisor to Trump’s economic transition team. Bessent, a major supporter of the president-elect, has faced criticism for his “business as usual” approach, particularly after describing tariffs as merely a bargaining tool.
• The debate over the next Treasury secretary — tasked with managing the nation’s $28 trillion debt — carries significant market implications. Growing uncertainty surrounding future debt management strategies has raised concerns among fixed-income investors, especially given the persistent US deficit. This has dampened demand for US Treasurys, as seen in recent auctions where investor appetite for longer-term securities has waned. In recent years, Treasury auctions have increasingly resulted in “tails,” indicating that investors require higher yields to absorb the supply of government debt.

• The selection of the next Treasury secretary is likely to hinge on loyalty, which would potentially give Scott Bessent an advantage. However, the inclusion of Kevin Warsh in the discussion — widely considered a contender to succeed Fed Chair Jerome Powell when his term ends in May 2026 — could serve as a trial balloon to gauge market reactions to his potential leadership of the central bank. President-elect Donald Trump is rumored to be exploring naming a new Fed chair up to a year before Powell’s term ends. If true, this could spark market volatility as investors grapple with uncertainty over leadership.

High Earners Save the Day: The nation’s largest retailers reported mixed earnings, signaling that the economy remains strong but is gradually slowing.

• Target reported sluggish growth in the third quarter as the retailer failed to match the revenue gains of its peers Costco and Walmart. The slowdown in sales growth comes as more shoppers prioritize value, showing less willingness to absorb price increases. Its main competitor, Walmart, performed better, driven by strong performance from households earning over $100,000 annually. These consumers, seeking to offset rising prices, have been more willing to trade down to lower-cost options.
• While overall consumption has slowed in recent years, higher-income households have remained relatively unaffected. According to the Bureau of Labor Statistics, households in the top two income quintiles contributed to over 70% of the total spending increase in 2023. This represents a substantial rise from the previous two years, when their share was 62% in 2022 and 61% in 2021. Conversely, lower-income households have moderated their spending due to financial strain. Having depleted much of their pandemic savings, these households have been forced to curb their expenditures.

• The slowdown in spending is likely due to cumulative inflation and a cooling labor market. This dynamic could complicate the Fed’s efforts to communicate a clear monetary policy path, as it aims to balance price stability and its maximum employment mandate. Lowering interest rates could alleviate financial pressure, particularly for debt-dependent households, and potentially stimulate consumption. However, it could also exacerbate inflationary pressures. As a result, we expect the Fed may moderate its easing cycle, especially if the labor market shows signs of heating up.

Ukraine War Escalation: Investors turn to safe-haven assets as Ukraine escalates its efforts to defend against Russia by taking greater risks on the battlefield.

• Ukraine has utilized US-supplied weapons to target locations within Russia, following President Joe Biden’s decision to lift previous restrictions. This significant escalation marks a turning point in the war, as Russian President Vladimir Putin has previously warned that such actions would be interpreted as NATO involvement and suggested that this could lead to a broader conflict beyond Ukraine’s borders. In response to the attack, Putin lowered the threshold for using nuclear weapons to include critical threats to the territorial integrity of Russia or Belarus.
• The deployment of these weapons comes as Ukraine takes greater risks on the battlefield, while Western support for the war shows signs of waning. German Chancellor Olaf Scholz, who recently held his first talks with Putin in two years, is centering his reelection campaign on a more cautious approach to supporting Ukraine, firmly ruling out the supply of long-range missiles. Meanwhile, US President-elect Donald Trump has proposed a peace plan that could involve Ukraine ceding some of its territory. The escalation of the war is prompting investors to seek safety in US-denominated assets.

• As geopolitical tensions escalate in 2025, we anticipate that the US will be perceived as a relatively safer investment haven. The US economy, while facing significant fiscal challenges, appears more resilient compared to its global peers. In particular, the EU and China are grappling with their own systemic issues. While China’s debt concerns are well-documented, the EU is now facing increasing scrutiny due to its high debt levels and slow growth. The ECB recently warned that these factors could potentially trigger a eurozone crisis.

In Other News: The EU is expected to push Chinese EV makers to transfer intellectual property to access subsidies, in another sign that the bloc plans on getting tougher with China in regards to trade. The US is recognizing Edmundo González Urrutia as president-elect, a decision likely to reignite tensions with Venezuela. Iran has expressed a willingness to curb its nuclear program as it looks to avoid tough sanctions under the new US administration.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with the latest sign of further global fracturing: a new Chinese policy further restricting the export of critical minerals with dual military and civilian uses. We next review several other international and US developments with the potential to affect the financial markets today, including an apparent new instance of Russian sabotage against members of the North Atlantic Treaty Organization in Europe and a Walmart earnings report that suggests US consumer spending remains strong enough to support overall economic growth.

China: The Ministry of Commerce has announced it will begin restricting the export of more critical minerals with dual military and civilian uses, including tungsten, graphite, magnesium, and aluminum alloys. The new restrictions, which will be effective December 1, will supplement current export restrictions on dual-use minerals such as germanium and gallium.

• All the restricted minerals are important to certain advanced technologies, such as semiconductors and electric vehicles.
• As we have argued many times before, China is likely to keep weaponizing its mineral resources to retaliate for the West’s new trade and technology barriers, which in turn aim to thwart China’s growing geopolitical, military, and economic power.
• As a result, we believe tensions between China and the West will continue to spiral, creating ever more risks for the global economy and financial markets.

Russia-Hezbollah-Israel: Israeli forces battling Islamist Hezbollah militants in southern Lebanon are reportedly finding they have large amounts of modern, powerful Russian weapons. Some of the weapons apparently came from Syria, which itself buys Russian weapons but also hosts Russian military bases. The findings suggest the Iran-backed Hezbollah fighters have access to more and better-quality Russian weapons than was previously known.

• Hezbollah’s unexpectedly large and modern arsenal of Russian weapons illustrates the increasing inter-connectedness and internationalization of today’s major wars. In Israel’s fight against Hamas in Gaza and Hezbollah in Lebanon, for example, those militants are being supported by Iran and Russia. In Ukraine’s effort to defend itself against Russia’s invasion, the Russians are being supported by China, Iran, and North Korea.
• In our latest Bi-Weekly Geopolitical Report, published on Monday, we wrote in more detail about the North Korean troops in Russia.
• This inter-connectedness and internationalization of conflicts seems to be a symptom of the way the world is fracturing into relatively separate geopolitical and economic blocs. The development seems to be progressing most strongly within the US bloc’s most powerful rival: the China bloc. Greater geopolitical and military cooperation by China, Russia, Iran, North Korea, and the rest of Beijing’s bloc is another reason to expect worsening global tensions and investment risks going forward.

Russia-Germany-Finland-Sweden-Lithuania: In another potential sign of conflicts becoming more inter-connected and internationalized, two undersea communications cables under the Baltic Sea have been cut so far this week. One of the cables connected Germany and Finland, while the other connected Sweden and Lithuania.

• The German defense minister has stated unequivocally that the damage was deliberate sabotage, rather than an accident.
• That implies the perpetrator was Russia, which has staged increasingly brazen attacks on defense, industrial, and infrastructure targets in NATO countries over the last year. Those attacks apparently aim to punish NATO countries for helping Ukraine fend off Russia’s invasion.
• For investors, the key risk is that Russia’s increasingly aggressive sabotage attacks could eventually draw NATO or at least Western European countries more deeply into the Russia-Ukraine conflict.

European Union: As part of a new program supporting the EU’s advanced battery industry, the European Commission reportedly plans to provide subsidies to Chinese manufacturers only if they open new factories in the EU and share technological know-how with local partners. The policy would turn the tables on Beijing, which long took the same approach to Western firms investing in China. It also represents a further hardening of the EU’s stance against Chinese economic competition.

US National Security Policy: The Office of the Director of National Intelligence and the Central Intelligence Agency both said their inspector generals (IG) have announced an intention to resign before President-elect Trump is inaugurated again. The announcements come as Trump is widely expected to fire existing IGs and replace them with loyalists, as called for in the Heritage Foundation’s “Project 2025” plan.

• Although appointed by the president, each IG is supposed to investigate cases of waste, fraud, and abuse of power independently and impartially and report them to their agency chief and Congress.
• Observers fear that if an agency’s IG is overly deferential to the president, it could operate less efficiently, and its officials would have a free hand to violate the law or otherwise abuse their power.

US Economic Policy: President-elect Trump has broadened his search for a Treasury secretary after getting irritated by the rivalry and jostling of his two initial candidates: hedge-fund manager Scott Bessent and Cantor Fitzgerald co-chair Howard Lutnick. Trump is now also considering former Federal Reserve board member Kevin Warsh, private-equity CEO Marc Rowan, Tennessee Sen. Bill Hagerty, and former US Trade Representative Robert Lighthizer. Betting markets currently give Warsh the nod, with a 43% chance of winning the nomination.

US Retail Industry: Retail giant Walmart this morning said sales from its digital channels and stores that were open at least 12 months were up 5.3% from one year earlier in its fiscal quarter ended on October 25, beating the expected rise of 3.9%. According to the company, the sales gain came from growth across a wide range of products and customer income levels. Adjusted earnings in the quarter came in at $0.58 per share, also beating estimates, and the company boosted its outlook for the full fiscal year.

• Given its enormous size and footprint, Walmart is a bellwether for US consumer demand. Its healthy sales, profit, and outlook in the latest quarter suggest consumption spending will continue to boost the overall US economy in the near term.
• Nevertheless, because of Walmart’s competitive pricing, its sales gains may also reflect trading down by some consumers stressed by high costs and continued inflation pressures at other retailers.

US Stock Market: According to VerityData, executives at firms in the Wilshire 5000 stock index have been selling equities in their own companies at a record place amid the run-up in prices after President-elect Trump’s victory in the November election. The strong insider selling suggests at least some corporate managers see their stock price as inflated and want to take profits.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with further evidence that factors such as high energy costs and heavy regulation are stifling European economic activity. We next review several other international and US developments with the potential to affect the financial markets today, including a warning by the UK government that it could force British pension funds to invest more domestically and new signs that President-elect Trump is committed to big tariff increases once he is inaugurated.

European Union: In a new sign of Europe’s declining competitiveness, industry association Plastics Europe said the Continent’s production of virgin plastics fell 8.3% in 2023, even as global output rose 3.4%. Mechanical plastics recycling in Europe also fell last year for the first time since 2018. The fall in output largely stems from broader challenges identified by former European Central Bank chief Draghi in his recent report on European competitiveness, i.e., high energy prices, restrictive regulations, and lower production costs abroad.

United Kingdom: In an interview with the Financial Times, Pension Minister Emma Reynolds warned that the government may force pension funds to invest more in British assets if the reform proposals it made last week don’t channel enough funding to UK infrastructure and companies. The proposals called for the country’s 86 local-government pension schemes to transfer their assets into one of eight pools.

• Expanding the eight pools into larger, more professionally managed pension funds is expected to channel more resources to local assets.
• Currently, Britons invest very little at home. For example, the existing local-government pension funds only invest about 10% of their portfolios in UK stocks or infrastructure.

Japan: Bank of Japan Governor Ueda today said the central bank remains open to further interest-rate hikes, despite uncertainties regarding the global, US, and Japanese economies. Because of the yen’s (JPY) sharp depreciation following the US election earlier this month, we think the BOJ could well hike interest rates again at its next policy meeting on December 18-19.

China: In a mass stabbing attack on Saturday, a disgruntled former student killed eight people and injured 17 others at a vocational school in Jiangsu province. That marked China’s second mass killing in less than a week, after a man killed 35 people by deliberately driving his car into a crowd outside a stadium. General Secretary Xi himself has decried the attacks and ordered local officials to identify such risks earlier and take steps to stop them.

• Given Xi’s longstanding effort to strengthen the Communist Party’s ideological work, including by emphasizing its responsibility to clamp down on dissidents and social disrupters, then the spate of mass killings over the last year is likely to prompt stronger surveillance, proactive arrests, and other social-control initiatives.
• Since some of the recent attackers seem to have been motivated by economic and social frustrations, there is also some chance that the attacks could convince Xi to adopt stronger economic stimulus measures than he has been willing to accept so far.

United States-Ukraine-Russia: According to administration officials, President Biden has finally authorized Ukraine to use its US-supplied long-range missiles for strikes within Russia. The decision was reportedly spurred by the Kremlin’s decision to supplement its forces with troops from North Korea.

• The missiles, known as the Army Tactical Missile System, or ATACMS, will initially be used by Ukrainian forces to defend their salient in the Russian region of Kursk. The missiles could be used against both Russian and North Korean troops, in part as a warning to Pyongyang not to insert more military resources into the fight.
• The decision runs the risk of spurring a stronger response against the US or its NATO allies in the weeks running up to President-elect Trump’s inauguration in January. For example, it could prompt the Kremlin to ramp up its on-going sabotage operations against NATO countries in Europe — a move that could potentially spark a destabilizing security crisis and drive down asset prices.

US Economic Policy: As President-elect Trump continues to mull his nominee for Treasury Secretary, reports indicate that hedge-fund manager Scott Bessent and Cantor Fitzgerald co-chair Howard Lutnick remain at the top of the list. Officials with the presidential transition say they have sought assurances from both Bessent and Lutnick that they would fully implement Trump’s proposed import tariffs of 60% against China and up to 20% against other nations.

• The demand suggests that full support for the tariffs has become a litmus test for Trump’s economic nominees. The demand was probably targeted mostly at Bessent, who has panned the 60% and 20% figures as merely “maximalist” goals.
• Trump observers and supporters often assume his more far-reaching policy proposals are merely negotiating ploys. However, just because a proposal is far-reaching and outside the norm of what other politicians might propose, that doesn’t necessarily mean it’s just a ploy. It could well be that Trump sees his proposed import rates as bottom-line figures, especially after insisting on them so often and consistently on the campaign trail.

US Transportation Policy: Reports this morning say advisors to President-elect Trump are preparing regulatory changes that would make it easier to introduce self-driving autos. The changes are expected to be a boon to electric-vehicle giant Tesla, which is controlled and run by Trump advisor Elon Musk. In response, Tesla shares have surged some 8% in pre-market trading so far today.

US Immigration Policy: As the presidential transition team continues to signal that President-elect Trump will launch mass deportations of illegal immigrants, businesses ranging from food producers and manufacturers to hotels are reportedly hiring lawyers to audit their staffs and train them on how to handle visits from immigration authorities. Industry associations are also warning that large-scale deportations and tighter restrictions on legal immigration will worsen labor shortages, force some businesses to close, and drive up prices.

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