Market Update 11/27/24

News Flow

It’s hard to believe that tomorrow is Thanksgiving, but even though the holidays have arrived the news flow is constant. Clearly, the dominant subject has been President-Elect Trump and the repercussions for both politics and the economy come January. Here’s what I’m following:

1) As of 4 am Eastern time, Israel and Lebanon agreed to a cease-fire. After 14 months of intensive fighting, both sides have concluded that the cost of war is too much. While we all hope this is permanent, ceasefires have fallen through before and the tension is high. But after five hours, peace endures.

2) The threat of global tariffs is real and likely. Yesterday, Trump suggested that 25% tariffs on Mexican and Canadian goods are coming. China is certainly in the tariff crosshairs as are certain European countries. I suspect that crowing tariff warnings is mostly a negotiating tacit, but if enacted watch out for heavy inflation in the short term.

3) The Trump transition team is quickly emerging and there are too many nominees to mention. But Fed Chairman Powell should remain through his term and Treasury nominee Scott Bessent is a true Trump loyalist and will bring fervor to the tariff talks. If tariffs are enacted, inflation will follow, and the Fed will be in a bind as pressure from the White House to lower rates will intensify. Cutting rates while inflation grows is unsound to the Fed and this conflict will be something to watch in the spring as the bond market will determine the victor.

4) Rumors are floating that a deal between Russia and Ukraine is being crafted. I’m hearing that Ukraine may be willing to sacrifice 20% of its territory in return for a cease-fire and NATO inclusion. I do worry that such a deal signifies a Russian victory and may embolden Chinese aggression towards Taiwan. But peace in Ukraine is more important right now.

Occasionally, I wish the headlines would cease and our team could take a few days to relax. But the news flows and we are always here interpreting the events. So, enjoy the turkey, embrace the family, and have a Happy Thanksgiving! We’ll handle the news flow.