WP Weekly Insight (11/1-11/7)

Market Recap & Snapshot[1]

• The Nasdaq led the broad indexes higher on Monday, November 3, following the announcement of Amazon’s $38 billion cloud infrastructure deal with OpenAI.
• The tech-heavy index turned tail and slumped 2% on Tuesday, and the S&P 500 dropped 1.2%. Multiple Wall Street executives warned about valuations following seven consecutive months of stock market gains since April’s “Liberation Day.” Indexes in Asia followed suit on Wednesday, with South Korea’s Kospi—a recent beneficiary of the AI spending spree—and Japan’s Nikkei both falling more than 2%.
• US stocks rebounded on Wednesday as the Supreme Court appeared skeptical of President Trump’s authority to unilaterally issue tariffs without Congressional approval.
• Moderately soft jobs data reignited economic growth concerns and caused stocks to sell off on Thursday. The Nasdaq Composite dropped 1.9% and the S&P 500 fell 1.1% on the day. Treasury yields dipped as investors sought the safety of government bonds.
• Stocks started Friday in a hole but were able to climb in the afternoon to finish off a bad week in positive territory. The S&P 500 and Nasdaq Composite saw losses of 1.6% and 3.0%, respectively, for the week.

The Fog of [Trade] War

• The US Treasury may have collected $34 billion in tariff revenue in October, according to a Pantheon Macroeconomics analysis of customs data. If that pace were to continue, the US would be on track for $400 billion over a full year. A haul of this size would go a long way to close the gaping budget deficit of $1.7 trillion projected by the Congressional Budget Office (CBO) in 2026. Bank of America estimates that consumers are paying 50-70% of tariff costs so far, with companies covering the rest.[2]
• The Supreme Court began hearing arguments over the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to justify tariffs, and the tone taken by several justices, including some appointed by Trump himself, was a skeptical one. The issue at hand is whether tariffs constitute a tax on the American people, which, according to Chief Justice John Roberts, “has always been the core power of Congress,” and not the executive branch.
• Should the Supreme Court strike down the use of IEEPA, the US may need to reimburse tariffs collected so far, and the Trump administration would need to find another legal route in order to pursue its current trade policy. It’s unclear what their backup plan is, but one likely exists. In the meantime, however, the US may be on the hook to return $165 billion in customs and duties collected so far this year. The High Court may take months to release its decision.

Economic Data

• Waldron Partners, like the rest of the financial world, is working with minimal economic data releases as the federal government shutdown drags on.
• Employment at US companies increased in October by 42,000 after a revised 29,000 decline a month earlier, according to ADP Research data on private payrolls released on Wednesday, November 5. While 42,000 jobs is a somewhat soft figure, it reflects a labor market that’s on a stable footing as opposed to one that is completely falling apart, as some fear. A rapidly deteriorating labor market would instill a greater sense of urgency in the Federal Reserve to cut interest rates faster and further. The ADP report is garnering the lion’s share of economists’ attention with official government data disrupted by the prolonged shutdown.
• In a more dour note on the state of the labor market, outplacement firm Challenger, Gray & Christmas said that US employers announced 153,074 job cuts in October, up a whopping 183% from September. Through October, employers have announced close to 1.1 million job cuts, the highest level since pandemic-stricken 2020 and up 65% from the same period in 2024.[3]
• The November reading of the University of Michigan consumer sentiment index dropped 3.3 points to 50.3, just a hair above the June 2022 all-time low mark of 50 (data back to 1978). The government shutdown, a surge in layoffs, and the compounding effects of stubborn inflation are believed to be the primary causes for consumer angst.
• Research from Moody’s Analytics indicates that the US economy is increasingly relying on the wealthiest consumers. Data shows that the richest 10% of households account for almost 50% of total US spending, up from 35% in the early 1990s. Wealth disparity issues aside, the concentration of economic activity in such a small subset of the populace risks longer recession and recovery timelines in the event of a financially led downturn.

• The wealthy aren’t showing any present signs of slowing, however. The National Retail Federation (NRF) projects that holiday retail sales could top $1 trillion for the first time in 2025, up roughly 4% from last year.
• China’s exports unexpectedly contracted in October for the first time in eight months, falling 1.1% from a year earlier. Economists had forecasted a 2.9% increase. Recent export growth has offered a much-needed lifeline to the Chinese economy as it struggles to shake off weak domestic demand instigated by a major contraction in the country’s property market.

Central Bank Watch

• The Bank of England held its short-term policy rate steady at 4% but hinted that it may well resume cutting interest rates at its next meeting in December. Like the US, inflation in the UK has remained stubbornly above the central bank’s target, inhibiting faster rate cuts in spite of growth concerns. Real GDP growth across the pond is expected to come in at a sluggish ~1.5% for 2025.

Fiscal Policy

• The government shutdown, which began on October 1, entered its second month and became the longest in history, surpassing the previous record of 35 days during Trump’s first term.
• Democrats insist on extending enhanced Affordable Care Act subsidies, affecting healthcare costs for over 20 million people, as a precondition for reopening the government. President Trump has floated eliminating the filibuster to bypass the Democrats in passing a budget.
• The shutdown has most directly affected government workers, air travel, and low-income Americans, with food aid for over 40 million people at risk.
• A federal judge ordered President Trump to reinstate suspended food assistance in its entirety, but on Friday, the President’s lawyers filed an appeal seeking to avoid fully funding SNAP.
• Roughly 600,000 federal employees are working without pay, and another 650,000 have been furloughed.
• The Federal Aviation Administration (FAA) was forced to reduce flight capacity by 10% at 40 airports due to an air traffic controller shortage as a result of the shutdown. ATCs have been missing paychecks and, perhaps not surprisingly, calling out of their scheduled shifts. More than 800 flights were canceled on Thursday, four times more than average, and another 700-plus on Friday.
• Off-year elections were held on Tuesday, November 4, and Democrats emerged as the clear victors.
• Self-described democratic socialist Zohran Mamdani will be New York City’s 111th mayor. Centrist Democrats Mikie Sherrill and Abigail Spanberger also won their gubernatorial races in New Jersey and Virginia, respectively.
• In a win for Governor Gavin Newsom, California voters approved Prop 50, which will empower the state legislature to redraw congressional district maps for the 2026, 2028, and 2030 elections. The new electoral map was designed to hand the Democrats five additional House seats. (Typically, the maps are only redrawn after each decennial Census.)
• California Representative Nancy Pelosi, the first female Speaker of the House, announced that she would not seek reelection after serving in Congress for 40 years.

Corporate Earnings & Stocks in the News

• With Q3 earnings season drawing to a close, S&P 500 companies have yet again reported solid earnings relative to analyst expectations. The index looks set to record double-digit earnings growth for a fourth consecutive quarter. In addition, S&P 500 companies are reporting impressive revenues relative to analyst expectations and year-ago results.[4]
• Overall, 91% of the companies in the S&P 500 have reported actual results for Q3 2025 through November 7, with the index sporting a blended (which combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate of 13.1%. All eleven sectors are reporting year-over-year growth in revenues.⁴
• Looking ahead, analysts are calling for earnings growth rates of 7.5%, 11.8%, and 12.7%, respectively, for Q4 2025 through Q2 2026. The forward 12-month P/E ratio clocks in at 22.7, above the 5-year (20.0) and 10-year (18.6) averages, but lower than the forward P/E of 22.8 recorded on September 30.⁴Stocks certainly do not appear to be cheap at current valuations, but we have to hand it to America, Inc. for its relentless ability to “walk the walk.”
• Palantir Technologies (PLTR) reported Q3 earnings that CEO Alex Karp modestly promoted as “the best results that any software company has ever delivered.” Founded as a defense contractor, Palantir has built out a thriving private sector business that saw sales growth of 121% in the quarter. Given such extreme growth rates, Palantir’s stock is trading at nosebleed levels of 248x adjusted EPS for the next 12 months and 88x forward sales. PLTR has more than doubled in 2025 but fell 8% on Tuesday following its earnings release.[5]
• Chipmaker Advanced Micro Devices (AMD) also reported strong earnings, with CEO Lisa Su claiming that “the demand for compute has never been greater as every major breakthrough in business, science, and society now relies on access to more powerful, efficient, and intelligent computing.”[6] The stock fell 5% as the solid results did not meet even loftier expectations.
• Amazon and OpenAI struck a $38 billion deal in which Amazon Web Services (AWS) will provide infrastructure for the ChatGPT maker’s AI workload over the next seven years. AWS is the largest cloud service provider in the world, followed by Microsoft’s Azure and Google Cloud.
• Berkshire Hathaway reported strong Q3 results as Warren Buffett’s company saw operating earnings growth of 33% year over year. Perhaps more importantly, Berkshire’s cash pile grew to a massive $381 billion, which can be viewed as the Oracle of Omaha taking a defensive posture as his last act in the face of the stock market’s recent ebullience. Buffett’s successor, Greg Abel, will take the reigns in 2026 with plenty of dry powder.[7]
• Tesla shareholders overwhelmingly approved Elon Musk’s new $1 trillion incentive-laden pay package (if the stock doesn’t increase, Musk stands to earn virtually nothing). Musk is the world’s richest person by far, according to the Bloomberg Billionaires Index, with a net worth of $469 billion as of October 31. Oracle Chairman Larry Ellison is in a distant second place with an estimated wealth of $323 billion. Of all companies, Tesla is most susceptible to key person risk in our view. Prior to the vote, Musk hinted at (threatened?) stepping down as CEO and/or allocating more of his time to his other companies, such as xAI or SpaceEx, if the package was not approved. As for Tesla, car sales in Europe and Asia have been slumping significantly as of late.
• The Trump administration on Thursday announced an agreement with weight-loss drugmakers Eli Lilly andNovo Nordisk that would allow Medicare to pay for GLP-1 medicines. In return, the two companies agreed to lower cash prices for their drugs through TrumpRx and to reduce prices for Medicare and Medicaid plans. The agreement clearly expands the size of the weight-loss drug market, but time will tell if higher sales volume can overcome margin compression due to discounted prices.
• Kimberly-Clark is buying Kenvue in a mostly stock deal. The tie-up, if approved by shareholders, would unite Kleenex and Huggies with Tylenol, Neutrogena, Listerine, and Band-Aid to create one of the world’s largest over-the-counter health brands. Kenvue has been under pressure on multiple fronts—most recently facing claims made by Health & Human Services secretary RFK Jr. that Tylenol causes autism in children, plus a new lawsuit in the UK regarding the carcinogenic effects of talc powder. Kimberly-Clark’s stock plunged 15% on the news as the Street’s initial reaction was not a positive one, to say the least.
• Starbucks sold a 60% stake in its China business to Hong Kong private equity firm Boyu Capital in an effort to shore up performance in the coffee chain’s second-largest market, where it operates some 8,000 stores.

In Other News…

• Former Vice President Dick Cheney passed away on November 3 at the age of 84. Cheney, who also served as Secretary of Defense during the Gulf War under President George H.W. Bush, was viewed by many as one of the most influential, powerful, and polarizing veeps in our nation’s history. His hardline tack in response to the 9/11 terrorist attacks contributed to what would become the US military’s subsequent, and ultimately unpopular, invasion of Iraq.

The Week Ahead

• Earnings season is winding down, but there are still a few big names reporting results next week. Walt Disney will be the week’s headliner when it releases on Thursday, November 13. Dow component Cisco Systems reports on Wednesday.
• The US stock market will be open on Tuesday, but the bond market will close for Veterans Day.
• We would be receiving October updates on consumer and producer price inflation, but the shutdown continues to halt most government data releases. It’s unclear when the backlogged data will be made available if and when the government ever reopens.

 Economic and Index Definitions

[1] Data obtained from YCharts unless otherwise noted

[2] Putzier, Konrad. “How the U.S. Economy Has Defied Doomsday Predictions on Tariffs.” The Wall Street Journal, 2 November 2025, https://www.wsj.com/economy/trade/trump-tariffs-us-economy-impact-89a1ea8d?mod=djem10point.

[3] “October Challenger Report: 153,074 Job Cuts On Cost-Cutting & AI.” Challenger, Gray & Christmas, 6 November 2025, https://www.challengergray.com/blog/october-challenger-report-153074-job-cuts-on-cost-cutting-ai/.

[4] Butters, John. “S&P 500 Earnings Season Update: November 7, 2025.” FactSet, 7 November 2025, https://insight.factset.com/sp-500-earnings-season-update-november-7-2025.

[5] “Levine, Adam. “Palantir Earnings ‘Best Results That Any Software Company Has Ever Delivered,’ CEO Says. Why the Stock is Tumbling.” Barron’s, 4 November 2025, https://www.barrons.com/articles/palantir-earnings-stock-price-2d6ccc2a?gaa_at=eafs&gaa_n=AWEtsqfXwPgAITXaaNz6_EYtwh-dTPxTpWW-FOyfdyPejlVPH_zJUoIuZwKoi-Jy6Ww%3D&gaa_ts=69142992&gaa_sig=_tcTh6dLCOyhh44iMbekCeVHC6z2QYaxHXSjWj2GFR7FP0GikDnJo53yKKb3uKOtQpGa1rwtYNeUXyhpY2juUA%3D%3D.

[6] Whelan, Robbie. “AMD Reports Sharply Higher Profits, Sales.” The Wall Street Journal, 4 November 2025, https://www.wsj.com/business/earnings/advanced-micro-devices-amd-q3-earnings-report-2025-9c2eddb8?mod=djem_b_Feature_1152025%2064833%20AM.

[7] Bary, Andrew. “Berkshire Operating Profits Rose 33% in Third Quarter. There Were No Stock Buybacks.” Barron’s, 2 November 2025, https://www.barrons.com/articles/berkshire-hathaway-earnings-stock-price-warren-buffett-9c6c7949?mod=djem_b_Feature_1132025%2062848%20AM.

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