All Posts
Fed survey shows drop in sentiment about jobs in October
We were scheduled to get the October jobs report from Washington today, but the government shutdown put the kibosh on that. Instead we have the New York Federal Reserve Banks’s monthly survey. According to that report, consumer perceptions of the job market worsened in October while expectations for inflation edged slightly lower.
Trump, Novo Nordisk, Lilly strike deal to lower price of GLP-1 weightloss drugs
Novo Nordisk (NVO) and Eli Lilly (LLY) traded higher on Thursday as the companies announced a major drug-pricing deal with the Trump administration. The companies’ GLP-1 weight-loss drugs, which cost roughly $1,000 to $1,350 per month now for patients without insurance, will be available for Medicare and Medicaid beneficiaries at sharply lower prices from 2026. The Wall Street Journal reported that Novo Nordisk and Eli Lilly will offer the lowest doses of their weight-loss drugs, Wegovy and Zepbound, through TrumpRx for $149 and $299 per month, respectively. So why would these drug makers agree to cut prices by $850 to $1,000 a month?
October layoff report is even worse than September
Layoffs accelerated in October from an already alarming level in September, according to newly released data from Challenger, Gray & Christmas, a company that tracks workplace reductions. U.S. employers have announced 1.1 million layoffs so far this year–the worst reading since the pandemic recession and on par with 2008 and 2009 job cuts during the Great Recession. The data includes a recent spate of layoffs at major companies such as UPS, Amazon and Target.
No surprise in MCD earnings–unfortunately
McDonald’s problem with its lower income customers continues. In third quarter earnings announced today, November 5, the company reported non-GAAP earnings per share of $3.22. That was 11 cents a share below Wall Street analyst estimates. Revenue of $7.08 billion, up 3.1% year-over-year, missed by $10 million. Global comparable sales increased 3.6%; U.S. comparable store sales increased 2.4%. The problem, as it was been in recent quarters is that the company continues to see sales drop to its lower-income customers.
Special Report: 3 Stock Market Bubbles: When will they burst? What to do now? Part 1 the AI bubble
This is a very difficult stock market. Even as stocks climb to new record highs. On the one hand, even investors who are all in, maybe even overweight to the long side, worry that this rally isn’t sustainable for much longer. By most historical standards valuations are off the charts. I get a steady stream of stories and posts asking whether XYZ stock has climbed to faro fast. Volatility on somedays can be downright scary with relatively minor events leading to big market moves. It’s simply very hard to stay on board this rally. On the other hand, it’s very hard to get off the train. I see lots of Wall Street analysts cutting recommendations from “buy” to “hold” on valuation fears, but I see almost no one saying “sell.” FOMO–fear of missing out–is just too strong. Which is totally understandable. The Standard & Poor’s 500 index was up 25.02% in 2024 and was up another 18.11% in 2025 to date through October 27. Market leaders have racked up even bigger gains. AI chip icon Nvidia (NVDA) was up 171% in 2024 and has gained another 39% in 2025 through October 27. It’s insanely difficult to walk away from those kinds of gains. So what’d you do?
The job cuts are starting to add up–is it a trend yet?
It’s been hard to tell what the individual announcements mean. Starbucks fired 900 corporate employees in September, but the chain had already done a February culling as part of new management’s drive to get the company back on track. In October, Target Corp. eliminated 1,800 roles to help the beleaguered retailer move faster. Amazon cut 14,000 corporate jobs and blamed artificial intelligence. But we’re starting to see signs of a worrying trend. After a labor market that seemed frozen in place–low hire but low fire–September seems to have brought job cuts across the economy. A report from outplacement firm Challenger, Gray & Christmas showed almost 950,000 U.S. job cuts this year through September, the highest year-to-date total since 2020. And that was before the heavy October run of cuts.
The manufacturing economy shrinks again
The Institute for Supply Management’s manufacturing index of U.S. factory activity shrank in October for an eighth straight month, driven by a pullback in production and tepid demand. The manufacturing index eased 0.4 point to 48.7, according to data released Monday. Readings below 50 indicate contraction.
Again, the debt market risk is rising number of subprime borrowers
If you remember the subprime mortgage crisis that almost took down the global financial system, these figures are sort of chilling. The share of consumers in the subprime credit risk category has reached levels not seen since 2019, a sign that a growing number of borrowers are in poor financial health. Subprime borrowers accounted for 14.4% of consumers tracked by credit reporting firm TransUnion in the third quarter, up from 13.9% in the same period last year. It’s the highest share for the period since 2019, when 14.5% of borrowers fell into the subprime category.
Problem? Money for the the AI building boom is increasingly coming from the debt markets
We’ve reached a tipping point–an important and dangerous one for investors–in the AI infrastructure boom.The looming problem isn’t the incredible increase in AI capital spending, but a major shift in how companies are going to pay for the capital spending.
In their recently released third quarter AI companies such as Microsoft (MSFT) and Amazon (AMZN) have bumped up already stunning forecasts for their spending on AI infrastructure. Analysts at Morgan Stanley, now estimate that global spending on data centers will reach nearly $3 trillion between now and 2028.
Cash flow at the big highly profitable technology companies will cover $1.4 trillion of that.
The rest–$1.6 trillion–will have to be raised in the debt markets. The new generation AI companies such as OpenAI are all still burning cash and don’t have any cash flow to put to paying for this capital spending.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
It’s a week of earnings, earning, earnings–and a week of reports NOT dominated by either BIG BANKS or BIG TECH.
China buys first cargoes of U.S. soybeans
China has bought at least two cargoes of US soybeans, its first known purchase this season. This might mark a revival of thU.S. China soybean trade after talks between presidents Trump and XI. The shipments are booked for loading and possible delivery later this year, sources told Bloomberg.
Good or bad news? AI spending boom continues this quarter
No slowdown on plans for AI capital spending in earnings results this past week from Big Tech. Alphabet/Google (GOOG) said it was increasing what it planned to spend on A.I. data center projects this year by $6 billion, after spending nearly $64 billion over the past nine months. Microsoft (MSFT) said it had spent $35 billion in its latest quarter, $5 billion more than it had told investors to expect just a few months ago.
Amazon (AMZN) said it would be “very aggressive” in adding more data centers and would spend $125 billion this year-— and even more next year. Meta Platforms (META) raised its spending forecast to at least $70 billion by the end of the year, which would be nearly double what it spent last year. The stock market reaction wasn’t unalloyed joy. Investors seemed generally positive on spending plans from Alphabet, Microsoft, and Amazon. And skeptical of Meta’s strategy and spending.
The fun at today’s Fed meeting was watching Powell try to lower expectations for a December cut
But what about December? To no one’s surprise–even my pet turtle Pericles saw this one coming–the Federal Reserve cut its benchmark short-term interest rate at today’s October 29 meeting by a quarter point to a range of 3.75% to 4%.Two members of the Fed’s Open Market Committee voted against the quarter-point increase. Stephen Miran, whom Trump appointed days before the committee’s last meeting in September, once again voted for a larger 50 basis point cut. Jeffrey Schmid, the president of the Kansas City Fed, voted for leaving rates unchanged. What was interesting to me about the meeting was how hard Fed chair Jerome Powell tried to talk down expectations for another cut at the December 10 Fed meeting. Going into today’s meeting the financial markets were pricing in a 90% chance of another cut in December.
Finally, my ETF replacement for my yen fund: Mathews Korea Active ETF MKOR
On October 10, I sold the Invesco CurrecyShares Japanese Yen Trust (FXY) out of my Perfect 5 ETF Portfolio. The ETF was down 2.4% since I added it to this portfolio on March 31, 2025. All of that loss had common the last week. They has dropped 3.9% against the dollar since October 3 as of the close on October 9. The yen now trades at its lowest levels since mid-February. What was up? The surprise election of Sanae Takaichi, a pro-stimulus conservative, to lead Japan’s long-governing Liberal Democratic Party. Takaichi is a follower of former Prime Minister Shinzo Abe and has long embraced the view that Japan should return to Abenomics, an economic policy which promoted more government stimulus and easy-money.The market reaction is speculation that she would implement a form of “neo-Abenomics,” including ultra low interest rates. So what’s my replacement to fill this non-U.S. asset slot in the portfolio?
Matthews Korea Active ETF (MKOR). I’ll be adding it to the Perfect 5 ETF tomorrow, October 30.
Cameco up 23.4% today on Trump nuclear deal with Westinghouse
Shares of Cameco (CCJ) soared by 23.42% today after the Trump administration announced it will take a stake in at least $80 billion of new nuclear reactors. The deal is with Westinghouse, owned jointly by Cameco and Brookfield Asset Management.
Jim’s Stock Alerts
COLDAmericold Realty Trust, Inc.
WMTWalmart Inc.
NVDANVIDIA Corporation
CMICummins Inc.
PAASPan American Silver Corp.
TBFProShares Short 20+ Year Treasury ETF
IGOViShares International Treasury Bond ETF
FXYInvesco CurrencyShares Japanese Yen Trust
UUPInvesco DB US Dollar Index Bullish Fund
BABATencent Holdings Limited
Download Jim’s eBook for Free
