Author Archive

• Morning News: October 9, 2025
  Eddy Elfenbein, October 9th, 2025 at 7:06 am

  Troubled Wind Developer Orsted to Cut 25% of Staff

  How Trump’s Green Hydrogen Cuts Are Opening the Door for China

  China Clamps Down Even Harder on Rare Earths

  G20’s Cross-Border Payments Push Set to Miss 2027 Target

  German Exports Unexpectedly Fell in August as Uncertainty Weighed

  Gold’s Record Rally Is Helping China Challenge Trump and the Dollar

  Rising Call-Option Demand Signals EM Local-Currency Bond Gains

  JPMorgan CEO Dimon Warns of US Stock Market Correction Risk

  Mixed Economic Signals Stoke Divisions at Fed, Minutes Show

  A Top Fed Official Favors More Interest Rate Cuts

  The CFPB Is a Failed Experiment In One-Sided Anti-Business Policy

  US Banks to Reap Bigger Profits as Deals Rebound in Third Quarter

  This Isn’t the Asset Boom Voters Wanted

  Dudley: AI Can Transform the Economy and Still Be a Bubble

  ‘I Believe It’s a Bubble’: What Some Smart People Are Saying About AI

  Reflection AI, an A.I. Model Start-Up, Raises $2 Billion

  The Soaring Cost of America’s Failed Export Strategy

  Robinhood Founders Join World’s Richest in Risky Trading Revival

  First Brands’ Go-To Bank Jefferies Opens Books as Fallout Builds

  Air Travel Disruptions Add Pressure on Congress for Shutdown Deal

  $100,000 H-1B Visa Fees Are a Distraction From Real Reform

  America Is Minting Lots of Cash-Strapped Millionaires

  Can Ferrari Persuade the Superrich to Buy an EV Sports Car That Won’t Rev?

  GM Backs Off Controversial EV Tax Credit Move

  Who’s Going to ‘Eat’ Tariffs? Not US Shoppers

  End the Realtor Tax To Ease America’s Housing Problems

  Close Brothers Warns of Higher Provision for Motor Finance Costs

  An Irish Factory Town Prospered With China. Now, Its ‘Jewel in the Crown’ Is Leaving.

  PepsiCo Sees Signs of US Beverage Turnaround Driven by Soda

  Shoemakers Target a New Market: Rest Days

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• Morning News: October 8, 2025
  Eddy Elfenbein, October 8th, 2025 at 7:05 am

  EU Sees New US Trade Demands Hollowing Out Trump Deal

  Argentina Pulls Out All Stops in Milei’s Defense of Fragile Peso

  Canada Goods-Trade Deficit Widens as Exports Retreat

  America’s Soybean Farmers Are Panicking Over the Loss of Chinese Buyers

  North America’s China Problem Is Bigger Than It Looks

  White House Says Federal Workers’ Back Pay During Shutdown Isn’t Guaranteed

  The Shutdown Is Already Squeezing These Businesses

  Gold Tops $4,000 for First Time Fueled by US Shutdown

  Gold Rally Points to Eroding Faith in Central Banks Worldwide

  If They Offer ‘Rewards’ For Deposited Stablecoins, Aren’t They Banks?

  Lehman’s London Arm Can Close After 17 Years and £28 Billion

  First Comes Dimon’s New Tower. Next Up, a JPMorgan Neighborhood

  Comerica’s Sale to Fifth Third Is a Rare Win for Bank Activists

  The Unofficial Jobs Numbers Are In and It’s Rough Out There

  A Corporate Tax Increase Would Bring Back the Inversions

  Why You Don’t Feel Rich

  Homeowners Are Pouncing on the Tiniest Drop in Mortgage Rates

  Thin Air-Traffic Staffing Spurs Delays at U.S. Airports

  Trump’s H-1B Visa Fee Could Strain Universities and Schools

  Threats Against Judges Have Crossed the Line

  Why Diamonds Are a Computer Chip’s New Best Friend

  Drilling Frenzy Arrives in Canada’s Pristine Wilderness

  Dig, Baby, Dig Won’t Solve AI’s Power Shortage

  Trump’s Coal Plan Is Doomed

  AI Power Boom Turns Nuclear Stocks Into the Market’s New Obsession

  OpenAI, Nvidia Fuel $1 Trillion AI Market With Web of Circular Deals

  AMD’s Su Joins the Party With OpenAI for Better or Worse

  Hyundai Gets Cold Shoulder From Trump Despite Charm Offensive

  How Much It Costs to Drive an E.V. and a Gas Car in Every State

  Tesla Debuts Cheaper, Stripped-Down Versions of Model 3 and Model Y

  Jefferies Has $161 Million at Risk in First Brands Collapse

  Advertisers Push Big Tech to Adopt Standards for Transparency in Ad Sales

  Ronaldo Becomes First Football Billionaire With Big Saudi Contract

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• CWS Market Review – October 7, 2025
  Eddy Elfenbein, October 7th, 2025 at 6:24 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  On Tuesday, the stock market snapped its seven-day winning streak. This was the market’s longest winning streak since a nine-day run this spring. Perhaps the government should shut down more often!

  

  For much of the morning, it looked like we were headed toward another up day, but the bears charged in and brought stock prices down. Interestingly, this was a day where defensive stocks did the best, and higher risk trailed the market.

  It seems like it was years ago, but the market had a very rough time this past April. Not only did the S&P 500 have its largest daily point gain, but it also had three of its six largest daily point losses. This spring was one of the most raucous periods in recent market history, and it ended exactly six months ago today.

  The current market isn’t anything like that. In fact, I continue to be impressed by how serene this market has been. Consider that from January 1 to June 16, the S&P 500 had 22 daily drops of more than 0.8%. Since then, it’s happened once.

  It’s not just stocks that are rallying. The price of gold soared over $4,000 per ounce for the first time. Adjusted for inflation, gold is higher now than it was at its mega-peak from 35 years ago.

  

  The Midas metal is on pace for its best year since 1979. This could be the third straight year of double-digit gains for gold. The gold rally may not be over. Goldman Sachs said gold will reach $4,900 per ounce before the end of next year.

  Historically, gold has tended to move in two speeds: relentlessly higher and plunging downward. I’m exaggerating, but gold does tend run either hot or cold and not much in between. Right now, it’s hot.

  Gold is certainly being helped by the Federal Reserve which is expected to continue cutting interest rates. Also, the U.S. dollar has slumped this year. Other safe investments like the Japanese yen have lost ground recently.

  Gold now trades at 81 times silver. The gold/silver ratio is one of the oldest prices known to man. It’s been followed since antiquity. Plato mentioned that the ratio was 12-to-1.

  

  In 1792, the U.S. Congress, at the advice of Alexander Hamilton, passed the Coinage Act of 1792. This was the government’s first attempt at price-fixing (and not the last). The act defined a U.S. dollar as 371.25 grams of silver or 24.75 grams of gold. In other words, Hamilton pegged the Gold/Silver ratio at 15. In 1834, Congress had to bump it up to 16. During Covid, the ratio got as high as 120.

  We continue to be in an oddly news-free zone for Wall Street. Many of the important economic reports have been delayed due to the government shutdown. On Friday, for example, we didn’t get the big September jobs report.

  The CPI report is due out next Wednesday, October 15, and that looks like it will be delayed as well. I don’t expect the government shutdown to last much longer than two or three weeks, but with politics involved, you never know what can happen.

  Going by history, investors have little to worry about in a government shutdown. It’s odd how much attention we give these reports, even when they’re endlessly revised. Without the reports, the market appears to be doing just fine.

  One agency that’s not impacted by the shutdown is the Federal Reserve. If you’re a fan of speeches by Fed officials, this is your lucky week. Five Fed officials gave public talks about the economy today. Another five will speak tomorrow, and a few more will speak on Thursday including Federal Reserve chairman Jay Powell. We’ll also get the minutes to the Fed’s last meeting.

  We’re getting close to the start of Q3 earnings season. The stock market will be closed on Monday for Columbus Day, but on Tuesday we’ll start to get some early earnings reports.

  The big banks and financial institutions usually report first. On Tuesday, Goldman Sachs, Wells Fargo, Citigroup, JPMorgan and BlackRock are set to report. Then on Wednesday, Morgan Stanley and Bank of America will report.

  I’m expecting a mostly positive earnings season. The big concern for Wall Street isn’t so much the earnings for Q3 but rather what kind of guidance companies are willing to offer. This is especially important during the shutdown. I’m concerned that companies won’t be as optimistic as expected. The tariffs and labor market could be hurting the bottom line more than people expect.

  I want to discuss a topic I’ve touched on before, but it’s worth covering again because of its importance. The current market rally has been strongly skewed away from more conservative areas of the market.

  In previous issues, I’ve refenced how Low Volatility stocks have trailed the market, but the real driver of this phenomenon is the under-performance of defensive sectors of the market. More specifically, I mean the lagging performance of Healthcare stocks, Consumer Staples and Utilities.

  The chart below is a 25-year look at the relative performance of Healthcare (black), Staples (blue) and Utilities (brown):

  

  Note how closely these three sectors follow each other. The correlation isn’t perfect, but it’s apparent even over a long period. I’m struck by how poorly these stocks have performed over the last three years. It seems that owning stability isn’t terribly important to investors right now.

  Healthcare stocks rebounded a bit recently. On our Buy List, we had a nice 18% gain from Thermo Fisher (TMO) in just a few days.

  Normally, investors favor the reliability of these stocks. The sales, earnings and dividends tend be very stable. That’s nice to see when the economy is falling apart. Notice how well all three lines did around 2007 to 2009.

  While the economy isn’t falling apart, there are signs that it may not be doing as well as some people think. For example, if we look at Gross Output, which is a broader measure of the economy, we get a very different picture. During Q2, Gross Output rose at a 1.2% rate while GDP grew at a 3.8% rate.

  Why is there such a discrepancy between the two stats? GDP tends to be consumer oriented while Gross Output is more focused on businesses. Dr. Mark Skousen, perhaps the leading advocate for Gross Output, said “the trade war is in fact wreaking economic havoc.”

  Skousen’s wrote in the WSJ:

  “If you include all transactions in wholesale and retail trade, the adjusted GO is up only 0.3%. More important, I calculate that overall business spending fell sharply, by an annualized 5.6% in real terms. For the first time since the financial crisis of 2008, we are seeing a huge gap between consumer and business spending. While consumption is still robust (up a real 2.6%), business is pulling in its horns, largely due to higher tariffs and the uncertainty of trade war.”

  The Trump administration said it’s buying $34.5 million in Trilogy Metals (TMQ), which is a Canadian mining company. That’s a stake worth 10% of the company. Shares of TMQ jumped 211% today. Not bad for one day.

  The government has warrants to buy another 7.5%. The goal is to reduce our reliance on China for important minerals.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

• Morning News: October 7, 2025
  Eddy Elfenbein, October 7th, 2025 at 7:05 am

  China Is Joining Russia’s Shadow War on Europe

  Can Canada Survive Donald Trump?

  Gas-Turbine Crunch Threatens Demand Bonanza in Asia

  France’s Energy Giant Sees Opportunity in the Volatile Electricity Market

  Ray Dalio Bets on Ocean Research With Singapore Venture

  IEA Cuts U.S. Renewable Energy Growth Outlook on Trump Policies

  New Zealand Central Bank Creates Board to Manage Financial Stability Issues

  The Markets Keep Telling Us the National Debt Is the Easy Part

  The Market Is Better Than Government at Promoting Competition

  NYSE Owner Near Deal for $2 Billion Stake in Polymarket

  Citadel’s Griffin Calls Rush to Gold as Safer Asset ‘Concerning’

  Private Credit Cash Pivots from ‘Risky’ West to Emerging Markets

  Stablecoins Could Suck $1 Trillion from EM Banks in Next Three Years, Standard Chartered Estimates

  Charlie Javice Duped JPMorgan Out of $175 Million. The Bank is Picking Up Her Legal Tab

  Trump’s Third Policy Pillar, Deregulation, Divides Economists

  Bessent Taps Social Security Chief to Serve as C.E.O. of I.R.S.

  Treasury Defends Lawfulness of Minting a $1 Trump Coin

  Pentagon Relaxes Press Access Rules

  Trump Aimed Shutdown Cuts at Democrats, but G.O.P. Districts Are Hit, Too

  Trump Opens Door to Talks GOP Has Resisted as Shutdown Extends

  Trump to Unveil Farmer Aid as China Shuns U.S. Crops

  Tariffs Don’t Build Factories, They Make Patients Pay More

  The White House’s Drug Plan Has Some Convenient Blind Spots

  OpenAI Launches Into Its Boring Is Beautiful Phase

  Japanese Startup Shows AI in a Name Is No Guarantee of Success

  Recruiters Use A.I. to Scan Résumés. Applicants Are Trying to Trick It.

  Supreme Court, for Now, Rejects Google Bid to Block Changes to App Store

  Union Pacific/Norfolk Southern Will Be An Energy, Prosperity Boost

  Car Shipper Hoegh Drops on Weaker Trade and Port Fee Warning

  A Devastating Fire at a Major Ford Supplier Will Disrupt Business for Months

  Corporate Anxiety Is Fueling a Multimillion-Dollar Industry of Gen Z Translators

  U.S. Warehouse Vacancies Steady as Demand Rises With Less New Space

  Retailers Stockpiled to Avoid Tariffs. The Holidays Will Put That to the Test.

  How Bari Weiss Won

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• Morning News: October 6, 2025
  Eddy Elfenbein, October 6th, 2025 at 7:05 am

  Takaichi Win Jolts Yen and Japanese Bonds, Triggers Stock Surge

  Top Fund Managers Urge Bank of England to Stop Selling Gilts Into Rocky Debt Markets

  French Markets Fall, Investors See No ‘Silver Bullet’ for Political Crisis

  French and German Power Prices Hit Seven-Month High on Cold Snap

  OPEC+ Differences Re-Emerge Amid Growing Signs of Oil Surplus

  The Oil Market’s 2026 Tsunami Will Be Costly to Finance

  The US Needs Better Ways to Defend Against Drones

  Is the Retirement Crisis Really a Disability Crisis?

  That ‘Landmark’ Free Speech Ruling Misses the Point

  Why Are Indian-Americans So Silent on US Visa Curbs?

  Trump’s Team Hones Message on Economy: Just Wait Until 2026

  A Renegade FTC Undermines the Trump Agenda

  If Trump’s Tariffs Are Ruled Illegal, Businesses Expect Refund Chaos

  Gold, Bitcoin Surge on Concerns Over Global Debt Pile

  Gold Powers Toward $4,000 as US Government Shutdown Drags On

  The Battle to Rewire Stock Trading the Crypto Way Is On

  Ferrari-Loving Trader Burned Wall Street With Bond Bet Leveraged 11,000-to-1

  Fifth Third Agrees to Buy Comerica for $10.9 Billion in Stock

  Take Two: Why Big Companies Are Naming Co-C.E.O.s

  Big Debt Deals Throw Fuel on the AI Boom

  OpenAI Inks AMD Chips Deal Worth Tens of Billions of Dollars

  Elon Musk Gambles Billions in Memphis to Catch Up on AI

  Shareholders Are Right To Ask Microsoft Questions

  Boeing Said to Prepare to Hike 737 Output as Soon as October

  Why Did Walmart Just Buy a Shopping Mall?

  Costco to Sell Popular Weight-Loss Drugs Ozempic and Wegovy

  New ALS Research Vindicates a 92-Year-Old Trailblazer

  Sharpie Found a Way to Make Pens More Cheaply—By Manufacturing Them in the U.S.

  High-End Golf’s Next Unlikely Impresario May Be a Baseball Star

  ‘Call Her Daddy’ Podcaster Alex Cooper Opens an Unwell Ad Agency

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• Morning News: October 3, 2025
  Eddy Elfenbein, October 3rd, 2025 at 7:03 am

  Why the Thai Baht Is Defying Economic Gravity

  The Engines of Iranian Economic Growth Have Stalled

  Merz Urges Germans to Accept Change or Suffer Economic Slide

  ECB Should Cut Rates to Boost Economy, Italy’s Finance Chief Says

  The Iowa Immigration Case That Is a Bipartisan Embarrassment

  Conservatives Go John Maynard Keynes With Their Birthrate Obsession

  Trump’s Spat With US Schools Revs Up Qatar’s Emerging Hub

  Trump Halts $2 Billion for Chicago Transit in Shutdown Play

  Trump’s Budget Chief, Slayer of Big Government, Moves Quickly in Shutdown

  The Jobs Report That Wasn’t Leaves Economists Guessing

  It’s Jobs Friday Without a Jobs Number: Here’s Where to Look for Alternatives

  Dudley: Maybe the Fed Shouldn’t Be Cutting Interest Rates

  Private Equity Is Hunting for a Quicker Path to Tap 401(k) Money

  Vanguard Rivals Finally Get Hands On Its Tax-Busting Fund Design

  Behind Job Weakness Are Hints of a Productivity Revival. Is AI the Reason?

  BlackRock Nears $40 Billion Data Center Deal in Bet on AI

  A.I. Is Driving a Stock Market Rally in China, Too

  Two Cables and the Hidden Subsea Battle Between US and China

  We Finally Have Free Anti-Robocall Tools That Work

  Apple Takes Down ICE Tracking Apps Amid Trump Pressure Campaign

  Colombia’s Petro Keeps Showing How Not to Handle the US

  Warren Buffett’s Berkshire Comes to the Aid of Occidental Petroleum—Again

  Tesla Sets New Sales Record as EV Subsidy Ends

  Musk Can Cheer the End of EV Subsidies This Once

  Boeing Likely to Record Billions in Charges Over 777X Debut Delay

  Cracker Barrel Drops Firm Behind Ill-Fated Logo Change

  Hell Hath No Fury Like a Coffee Drinker in 2025

  Ice-Cream Maker Froneri Hits $17.6 Billion Valuation in Funding Deal

  Why America’s Fridges Are Overflowing With Sauce

  Video Games Have Become the Main Way Boys Socialize. Is That Bad?

  Buying Blind-Box Toys Is All the Rage. Our Simulation Shows How Addictive It Is.

  L.A.’s Entertainment Economy Is Looking Like a Disaster Movie

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• Morning News: October 2, 2025
  Eddy Elfenbein, October 2nd, 2025 at 7:03 am

  Japan’s Sleepy $8 Trillion Bond Market Wakes Up as Yields Climb

  EU Risk Watchdog Calls for Urgent Safeguards on Stablecoins

  EU to Propose Doubling Tariff Rate on Steel Imports to 50%

  White House Uses Shutdown to Maximize Pain and Punish Political Foes

  Trump Raises Stakes for GOP in Shutdown With Layoff Threats

  Trump’s Fixation on Americas Dooms the US as a Superpower

  New Tariffs Could Worsen America’s Housing Crisis

  Misguided Texas Housing Reforms Could Put a Chill On Rentals

  Gold Hovers Near Record High on Rate-Cut Bets, Political Uncertainty

  Fed’s Independence Remains at Risk Despite Temporary Legal Victory

  US Banks Expect Victory in Capital Requirements as Trump Regulators Revamp Rules

  The Mysterious Billionaire Boss at Jane Street Smashing Trading Records

  Forget the Shutdown. Investors Have Tech Rally FOMO

  The Democrats Should ‘Rush to China’ On Social Security

  Great Cons Are Part of the American Story. And That Might Not Be So Bad.

  China Outpaces US on Rail Links to Africa Minerals

  US Judge Gives Offshore Wind a Ray of Hope in Trump Era

  The Gas Turbine Shortage Might Be a Climate Problem

  Berkshire to Buy Occidental’s Chemical Unit for $9.7 Billion

  Morgan Stanley’s Tech Boss Says AI Coding Has ‘Profound’ Impact

  Amazon’s AI Won’t Stop at Finding Your Lost Dog

  The FTC Shakes Down Amazon for Well Exceeding Customer Needs

  Meta Mines Your Chatbot Discussions to Serve More Personal Ads

  How Does Silver Lake Exit That $55 Billion EA Leveraged Buyout?

  The Aussie Surfer Who Parlayed His Connections Into a $55 Billion Deal

  OpenAI Valuation Soars to $500 Billion, Topping Musk’s SpaceX

  The IT Executive Tasked With Revamping How Tesla Sells Cars

  Musk Becomes First Person to Hit $500 Billion Net Worth, Forbes List Shows

  Spotify Might Just Prove That Two CEOs Are Better Than One

  McDonald’s Quest to Reclaim World’s Biggest Restaurant Title Starts in Texas

  Marketing Is Helping Carnival Charge More for Its Cruises

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• Morning News: October 1, 2025
  Eddy Elfenbein, October 1st, 2025 at 7:07 am

  Hamas Said to Meet Qatar, Turkey Officials Over Trump Plan

  Trump’s Gaza Plan Needs Israel’s Neighbors To Buy It

  NATO Fund to Borrow From Covid Playbook to Counter Russian Threat

  G-7 Nears Agreement to Ramp-Up Sanctions on Russia’s Oil Revenue

  Oil’s Saudi Put Has Been Replaced With a China Put

  India’s Central Bank Stands Pat Amid Tariff Pressures

  Japan’s Firebrand Investor Is Back, Along With the Country’s Stock Market

  Young Japanese Investors, Bucking Their Elders, Embrace Stocks

  Empowering Women On World Financial Planning Day

  US Begins Government Shutdown With Trump, Democrats at Impasse

  How Government Shutdowns Affect the Economy

  How Social Security Will Be Affected by a Government Shutdown

  Shutdown Puts a Divided Fed in a Perilous Position

  White House Pulls Pick to Lead Labor Data Agency

  The Mass Firing of Federal Workers Will Be the Genius of This Shutdown

  How the US Government Shutdown Impacts Climate Work

  National Parks Told to Remain Open During Shutdown Despite Risks

  Gold Surges to Record as US Government Shutdown Boosts Havens

  Why Investors Can’t Seem to Get Enough of Gold

  Bond Traders Boost Bets on 10-Year Rally as Shutdown Begins

  Wall Street Is Unfazed by Powell’s ‘Highly Valued’ Stocks Remark

  Morgan Stanley Scores an Easier ‘Stress Test’ From the Fed

  Apollo Executive Sees Massive Power Demand Steering Capital

  Inside EY’s U.S. Auditing Cleanup to Reduce Shortfalls

  US Mortgage Rates Rise, Stalling Nascent Recovery in Home Demand

  China Displays Its Gizmos and Ambition, but Fewer Answers on Trade

  Taiwan Rejects US Demand for Half of Chips to Be Made in America

  U.S. to Take Equity Stake in Lithium Americas and Its Nevada Mining Project

  The Company Founders Who Think They Need Not One but Two Successors

  Trump Announces Deal With Pfizer to Sell Drugs to Medicaid at European Prices

  Nike Is Grinding Forward But It Needs a Hit

  Cracker Barrel Rejects the Dispossessed, ‘Trump Voter’ Narrative

  Broadway Needs More Risky Musicals

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• CWS Market Review – September 30, 2025
  Eddy Elfenbein, September 30th, 2025 at 6:24 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  The third quarter of 2025 comes to an end today and it was another good one for Wall Street. For Q3, the S&P 500 gained 7.79%, and if we include dividends, then the S&P 500 was up 8.12%. With three months to go, the stock market is on track for another winning year (+13.72% or +14.83% with divs). This was the market’s second-best September of the last 27 years.

  What’s remarkable is that the stock market has rallied despite all the scary pitfalls that we were told would certainly derail the bull market (wars, tariffs, the Fed).

  

  The latest worry is that a potential government shutdown will sink the market. At midnight tonight, the money runs out. I won’t get into the politics of the shutdown, but the major sticking point is money for enhanced Affordable Care Act subsidies.

  I will say that previous government shutdowns (there have been several) haven’t hurt the stock market. Economists generally believe that any short-term damage from a shutdown can quickly be rectified.

  On Monday, there was a last-ditch effort to stave off a shutdown but that went nowhere, as expected. The Senate plans one more vote before Zero Hour but that also appears to have little chance of passing.

  Asked if there’s any room for negotiations on Obamacare subsidies by Tuesday’s midnight shutdown deadline, Republican Sen. John Kennedy said, “Not unless Chuck stops smoking wizard weed.”

  The condensed version of the story is that the Republicans are blaming the Democrats, and the Democrats believe the exact opposite.

  Our fiscal issues are indeed very large, and there’s no easy fix. Fiscal 2025 also comes to an end tonight, and it looks like the deficit will be about $2 trillion. When I say “about,” I’m speaking of a range of hundreds of billions of dollars.

  

  More than half the federal deficit racked up over the last 230 years has come about since 2020. Over the last 11 months (ending in August), the IRS has collected 6% more taxes than the same period last year.

  The White House budget office has threatened mass firings if there is a shutdown.

  The move by Senate Majority Leader John Thune is intended to maximize pressure on his counterpart, Senate Minority Leader Chuck Schumer, who has so far blocked a plan for a status-quo funding bill without commitments to extend the Obamacare subsidies. Schumer, for his part, said the outcome is up to Trump and his GOP leaders.

  “It’s now in the president’s hands. He can avoid a shutdown if he gets the Republican leader to go along with what we want,” Schumer said Monday night, hours after Congress’ top four party leaders met with Trump for a last-ditch meeting at the White House.

  I’m definitely not the person who will add any insight to this political standoff. I’m only interested in any possible economic or financial outcomes, and there are several.

  For one, when the money gets tight, the government can furlough workers. During the 2018-19 standoff, 340,000 employees were furloughed. Although at that time, the government had passed some bills to keep parts of the government working. Not this time. Some estimates say that furloughs could be as high as 800,000. Salaries for government employees could also be delayed which would have a further impact on consumer spending.

  Another outcome of a government shutdown would be a delay of important economic data. That would include the September jobs report which is due out on Friday. The inflation report may also be delayed.

  Wall Street expects Friday’s jobs report to show a gain of 51,000 net new jobs last month. Economists also expect to see a 0.3% increase in wages and it expects the unemployment rate to stay at 4.3%. I’d really like to see those wage numbers improve. Consumer spending is the main driver of the U.S. economy.

  Tomorrow we’ll get the ADP report on private payrolls. That report won’t be delayed since it’s from a private company. I’ll caution you that the ADP report is a very imperfect bellwether of the BLS’s report. Also tomorrow, we’ll get the ISM Manufacturing Index for August. I like this report since it’s a survey, and we get it with very little lag time.

  We got the August job openings report today, which is officially called the Job Openings and Labor Turnover Survey, or JOLTS report. It showed that jobs openings increased a little bit in August. Job openings rose by 19,000 to 7.227 million. Economists had been expecting 7.185 million.

  

  Hiring decreased by 114,000 to 5.126 million, and layoffs fell by 62,000 to 1.725 million.

  This is further evidence that the labor market isn’t completely healthy. Exxon said today that it plans to cut 2,000 jobs, which is 3% to 4% of its workforce. Over the last three months, job gains have averaged 29,000 per month. That’s down from 82,000 over the same period last year. We’re at an odd point because the demand and supply for labor are falling. It would be nice to have more data.

  If the government shuts down, economic data from the Federal Reserve would continue since the Fed isn’t funded by the government. The weekly jobless claims report also won’t be impacted since it’s collected at the state level, but I am concerned about the jobs report and the CPI report.

  RIP: Larry Mendelson

  We had some sad news this week. HEICO said that its long-time CEO Larry Mendelson died. In the 1950s, he took a finance class taught by David Dodd. Fans of value investing will recognize Dodd’s name. He was the co-author of Security Analysis with Ben Graham. Security Analysis is probably the foundational text of value investing.

  Mendelson took those lessons to heart. He made a good deal of money in real estate and wanted to diversify his holdings. That led him to invest in an under-performing industrial company. He really didn’t care what he bought, as long as it was cheap and had potential to be retooled for future growth. He chose well.

  Since 1995, the stock has increased more than 1,000-fold.

  

  HEICO was originally founded in 1957 by Dr. William Heinicke as Heinicke Electronics. By the 1980s, Mendelson controlled a sizeable share in the company and was able to make himself CEO. The family still owns a large chunk of the voting shares, and several family members hold key positions within the company.

  HEICO makes replacement parts for the airline industry. If a commercial aircraft needs some obscure new part, the airline can’t run down to the local hardware store. Instead, it needs to special-order it. Moreover, there’s a great deal of cost pressure on the airlines to keep the older planes serviceable.

  Also, the aircraft parts often need to meet strict regulatory guidelines. The part maker really has to know what it’s doing. That’s where HEICO comes in. The business is lean and well run.

  When airplane owners need a new part and go back to the original equipment manufacturer (OEM) to get replacements, they’re often charged a steep price. The profit margins can exceed 30%. That provides enormous opportunity for HEICO. Consider that many aircraft are over 20 years old.

  The aviation industry is broadly diversified, and HEICO is also able to get sales from commercial and military customers. That means that if there’s a drop-off on one end of the business, the other side can pick up the slack. Wherever there’s a demand to cut costs, HEICO has the potential to do well.
  HEICO’s role is like that of a generic drugmaker. HEICO provides a low-cost copy of the original product, which is regulated by the Federal Aviation Administration. HEICO does more than aircraft parts. They also supply parts for satellites, rockets, missiles and even medical instruments.

  HEICO is in an enviable position and nearly dominates its market. The company sells to 19 of the top 20 airlines in the world, and their customers love them.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

• Morning News: September 30, 2025
  Eddy Elfenbein, September 30th, 2025 at 7:08 am

  China’s Factory Activity Gauges Show Signs of Improvement

  China Bans New BHP Iron Ore Cargoes as Pricing Dispute Grows

  Weak Japan Data Poses Headache for Central Bank

  French Inflation Picks Up Pace as ECB Looks Likely to Keep Rates in Place

  London Drops Out of Top 20 IPO Markets After Falling Behind Mexico

  Foreign Bank Cash Decline Lifts Fed Funds Rate Ahead of Quarter-End

  Trump Officials Flesh Out Tariffs on Kitchen Cabinets, Furniture and Timber

  Trump’s Deportations Are Driving a Remittance Boom in Latin America

  US SEC Chair Fast-Tracks Trump Push to End Quarterly Earnings Reports

  Robert Moses Showed That Spending Cuts Just Feed the Spenders

  US Government Shutdown Looms With Trump, Democrats at Odds

  How Government Shutdowns Affect the Economy

  Rise of ‘Accidental Landlords’ Is Bad News for Investors Who Bet Big on Rentals

  Americans Seek More Control of Their Financial Future

  Charlie Javice Sentenced to 85 Months in Prison for Fraud

  The War on H1-Bs Has a New Front — and Bipartisan Support

  America’s Elite Universities Have Lost Their Way

  YouTube Settles Trump Lawsuit Over Account Suspension for $24.5 Million

  Exxon to Cut 2,000 Workers as Oil Sector Job Losses Mount

  Boeing Has Started Working on a 737 MAX Replacement

  This Windowless Plane Is Vying to Be the Private Jet of the Future

  Why General Motors Boss Mary Barra Is Slamming the Brakes on Lofty EV Ambitions

  See How E.V. Road Trips Went From Impossible to Easy

  What We Know About ChatGPT’s New Parental Controls

  Electronic Arts Buyout Is a Whole New Game

  The Seductive, and Risky, Power of Live Sports Betting

  Spotify Founder Daniel Ek Leaving CEO Job

  Food Supplier Mama’s Creations Turns to Dealmaking to Fuel Growth

  The $400 Million Restaurant Man

  Red Bull Owners Prop up Riches With Dividend as Profit Drops

  ‘You Can’t Run From Fear’: American Eagle’s CEO on the Sydney Sweeney Fallout

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