Today
Equity futures are under significant pressure, following the worst session in more than a month for U.S. equities. The pullback reflects a broader risk-off shift, driven by growing uncertainty caused by the government shutdown and concerns that elevated AI-driven valuations may be due for a reset. The end of the record-long U.S. government shutdown has also brought uncertainty, as missing economic data from the standoff may cloud the Fed’s decision-making and weigh further on market sentiment. Added pressure has come from shifting expectations around Fed rate cuts, with a December cut now effectively a coin toss, down sharply from a month ago.
Back to work. After a record 43-day U.S. government shutdown that halted air travel, froze food assistance, and left 1.4 million federal workers unpaid, agencies are beginning to reopen, though the political standoff remains unresolved. The temporary funding deal restores back pay, reverses thousands of dismissals, and restarts key programs like SNAP, museum operations, and airport security, but does not constrain Trump’s spending authority nor address the healthcare subsidies that originally sparked the shutdown. Both parties are dealing with internal rifts, and public blame is almost evenly split. The economic fallout may also take time to clear, with missing federal data, delayed small-business loans, and an estimated 1.5% GDP drag likely to linger even as activity eventually recovers. On the data front, we’re still partly in the dark. The October jobs report will be released, but without the unemployment rate, as statistical agencies are only gradually resuming operations. The Bureau of Labor Statistics has yet to publish a revised release schedule, leaving a gap in visibility on the economy’s current health.
China’s economy continued to weaken in October as factory output and retail sales grew at their slowest pace in more than a year. The decline highlights just how much pressure the country has been under from the U.S. trade war, soft domestic demand, and a deepening investment slump. Industrial production rose just 4.9% and retail sales 2.9%, both missing expectations, while fixed-asset investment fell more sharply than forecast as confidence declined amid the persistent property downturn and fading government subsidies. Policymakers acknowledge that structural reforms are needed to rebalance the economy toward consumption and reduce heavy reliance on exports and infrastructure spending, but these changes are politically risky. With exports tumbling, auto sales unexpectedly contracting, and consumer sentiment muted even during Singles’ Day promotions, analysts warn that China’s growth momentum is deteriorating and that meaningful new policy support may be required in 2026 despite officials’ concerns about using too much stimulus now.
While it doesn’t appear as dire, Europe is also facing its own growth challenges. The euro zone economy expanded by a modest 0.2% in the third quarter, confirming earlier estimates, as strong performances in France and Spain offset continued stagnation in Germany, where weak output, muted consumption, and soft exports persist. Annual growth reached 1.4%, slightly above expectations, while the bloc’s trade surplus jumped to €19.4 billion in September, its highest since March, driven by strong exports to the U.S., particularly in chemicals, pharmaceuticals, and machinery. Economists caution that the rise may reflect temporary factors such as frontloading ahead of tariffs, and despite the currency bloc’s resilience amid global trade tensions, there are few mechanisms that can meaningfully accelerate growth.
Hedge funds and institutional investors have been using the market’s record-breaking rally to take profits, selling more than $67 billion in equities this year, while retail investors have continued to act as the primary dip-buyers sustaining the three-year bull market. A new report found that hedge funds and institutions have been the largest net sellers, especially of tech stocks amid valuation concerns, while retail investors, reminded of the pandemic rebound, consistently added cash during pullbacks and helped push the S&P 500 to repeated all-time highs. With the market’s sharp run-up showing signs of exhausting retail enthusiasm, the divide between professionals and small investors will be closely watched.
Trump is preparing significant tariff cuts and a series of targeted trade deals with Argentina, Guatemala, El Salvador, and Ecuador in an effort to lower food prices and address voter concerns about affordability. The agreements would remove or reduce tariffs on items like beef, bananas, and coffee beans, while broader tariff exemptions also under consideration. The White House expects cheaper imports to translate into lower grocery bills, though many of the changes simply roll back tariffs Trump imposed earlier this year. The most notable deal supports Argentina’s President Javier Milei by expanding market access for U.S. goods, while easing beef trade has drawn criticism from U.S. ranchers worried about competition. Additional negotiations are also being negotiated, although it seems like Canada is still in the doghouse.
Joy Ride. Earlier this week, a man (briefly) stole a Hamilton city bus after the driver stepped away for a break, taking it on a 15-minute joy ride with roughly 10 unaware passengers aboard. The man drove the bus up the Mountain, made regular stops, followed passenger directions when he became lost, and even refused boarding to someone with an expired pass (rules are rules), all while causing no damage and injuring no one. Police tracked the bus using GPS to avoid alarming the driver, ultimately arresting the man without incident. He is charged with theft over $5,000, but seeing just how good he was at driving, seems like he may get a job offer soon enough.
Diversion: Was never going to end well
