For the week 10/27-10/31

[Posted 4:30 PM ET, Friday]

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Edition 1,384

President Trump had a largely successful Asian adventure this week, securing rare earth minerals deals with the likes of Malaysia, Thailand, Cambodia and Japan, plus a surprise trade agreement with South Korea, having secured a rare earths deal with Australia the week before.  Trump also bonded with the new leaders of Japan and South Korea, which is most important, the two, along with Australia and the Philippines, vital bulwarks in keeping China under control.

But speaking of China, the latest trade truce is much ado about nothing.  Yes, better to talk face-to-face, as Trump did with Xi Jinping, then not do so, but as pointed out below, zero was really gained except the further knowledge that when it comes to rare earths, China has a huge amount of leverage until the rest of the world catches up, and these are multiyear projects to do so.

It’s also just a fact that China never abides by its agreements.  For example, look for China to buy a lot of American soybeans the rest of 2025, but fall far short of its obligations next year.

It was also telling that, per President Trump, the topic of Taiwan didn’t come up in his discussions with Xi.

As in the U.S.-China relationship remains very fraught and could blow up at any time.  It didn’t escape casual observers that Xi didn’t crack a smile throughout.  This is not a good guy, President Trump.

On a different topic, both the Wall Street Journal and Miami Herald reported today that the Trump administration has chosen military installations inside Venezuela to attack, “and the strikes could come at any moment.”

The attacks “will seek to destroy military installations used by the drug-trafficking organization the U.S. says is headed by Venezuelan strongman Nicolas Maduro and run by top members of his regime,” with the goal of “decapitating the cartel’s hierarchy,” the Herald reports.

“If President Trump decides to move forward with airstrikes…the targets would send a clear message to (Maduro) that it is time to step down,” U.S. officials told the Journal.

Meanwhile, our hearts go out to the people of Jamaica, who have a lot of hard work ahead of them to recover from Hurricane Melissa, and you just hope some semblance of order can be maintained in what is already a desperate situation for hundreds of thousands.

Wall Street and the Economy

Prior to the Federal Reserve’s Open Market Committee meeting, Tuesday and Wednesday, the environment Chair Powell and Co. faced….

Editorial / Wall Street Journal

“Is ‘three’ the new ‘two?’  Consumer prices notched another 3% year-on-year increase in September, according to data published (last) Friday from the Bureau of Labor Statistics.  No one in Washington seems bothered that this remains well above the Federal Reserve’s 2% inflation target.

“The headline measure of consumer-price inflation rose 0.3% from August to September, with so-called core prices excluding food and energy increasing 0.2%.  But core inflation also hit 3% year-on-year, a signal that households’ purchasing power continues to drop at a rapid pace. The White House press office hailed this as an anti-inflation triumph.

“There’s always some excuse or explanation that politicians and Wall Street offer to say this is no big deal.  One month it was healthcare costs, another month shelter, and so on.  This month the blame goes to energy prices, which rose 1.5% from August to September.  But at some point you have to admit all these add up to a persistent inflation problem.  At a 3% inflation rate, the value of a dollar today would be 73.74 cents in 10 years.

“There’s plenty of blame to go around. It’s obvious now that Chairman Jerome Powell’s declaration of mission-accomplished in September 2024 was premature when he began the Fed’s interest-rate cuts this cycle.  Fed economists believed, and still believe, that the tightening the central bank already has done will yield slower inflation if households and businesses will wait a little longer.

“Maybe it will, but not so far.  Plenty of evidence from credit and equity markets suggests that financial conditions haven’t been tight for some time – from record equity valuations to unusually tight credit spreads for junk debt, to (until this week) the surging gold price and more.  Yet the Fed seems poised for another 25-basis point cut in its target short-term interest rate when its Open Market Committee meets next week.

“President Trump also bears some responsibility…his tariffs are contributing to higher prices in many goods.

“The longer the tariffs last, the more households pay, no matter how much the Administration claims companies or foreigners will eat the cost.  New research from the St. Louis Fed finds tariffs account for 0.5 percentage point of the 2.85% annual inflation from June to August, using the Fed’s preferred personal-consumption-expenditure index, and about 0.4 percentage point of 2.9% core inflation.

“Economists will debate whether this constitutes general inflation or merely a one-time bump in the price level.  Voters will notice only that they’re paying more for the goods and services they buy.

“Meanwhile, for all the controversy over Mr. Trump’s attempts to meddle with the Fed, he and Mr. Powell both seem to want to lower interest rates.  It makes us wonder if 3% is Washington’s new de facto inflation target.  We doubt this is what anyone voted for in 2024.”

And then the Fed responded, Wednesday, after their two-day confab, and lowered their target range for the federal funds rate by ¼-point to 3.75%-4.00%.

But there were two dissenters, one, Stephen Miran, Trump’s appointee, who wanted the funds rate lowered by 50 basis points, and another, Jeffrey Schmid of the Kansas City Fed who preferred no change to the target range as he’s concerned that inflation remains at 3%.

In the statement, the FOMC said:

“Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated….

“In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance or risks…The Committee is strongly committed to supporting maximum employment and returning inflation to its 2% objective.

“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.  The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impeded the attainment of the Committee’s goals….”

But notice in the first paragraph how they talk about “August,” and understand the Fed hasn’t seen the September jobs report, and won’t see October’s right away even if the government reopens next week.  It is missing crucial inflation data, like the personal consumption expenditures index report that was due out today.  The Fed is largely flying blind during the shutdown.

So then Chair Jerome Powell appeared for the press conference after the Committee’s announcement and he talked of a “rigorous debate inside the room,” which meant, reading between the lines, that there was a battle between the camps wanting further rate cuts in December and beyond, and the camp that is thinking, ‘We’ve done enough, let’s pause unless the data further warrants more cuts…inflation is at 3%!’

Powell then roiled the markets when he said another rate cut in December isn’t guaranteed.

“A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it,” he said.  Immediately, as this comment was made another 2:30 p.m. ET, the stock and bond markets both cratered…odds of a December rate cut slashed from 85% to 65% instantly.

Mark your calendar, Wednesday, Nov. 19, which is when the Fed is slated to release the minutes from this week’s meeting.  It will be interesting reading.

Today, two non-voting Fed members took the side of Jeffrey Schmid in saying (if they had a vote), they would not have cut the funds rate further.  [One of them is a voting member next year.]

Editorial / Wall Street Journal

“Mr. Powell is admittedly in a tough position. Faced with contradictory data about two prongs of a mandate in conflict, he must pick one to focus on – with a President sniping at him to ease money at every opportunity.  But inflation in our view remains the bigger threat until it’s vanquished.

“The Fed’s confusion means it’s time for Mr. Trump to put the Fed out of its misery by announcing an early decision on Mr. Powell’s successor when his term as chairman ends in May. And to choose someone with the credibility, both in the financial markets and at the Fed, to whip the place into shape.

“This would send a clearer signal to markets on the way forward, and give voters some more clarity and accountability – in time for next year’s midterms.”

Speaking of replacing Powell, Treasury Secretary Bessent on Monday confirmed the names of five finalists to succeed him at the Fed….current board members Christopher Waller and Michelle Bowman, former Fed Gov. Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock Inc. executive Rick Reider.

Bessent said he hopes to present a “good slate” to President Trump after the Thanksgiving holiday.

–Two economic items of note this week not impacted by the shutdown…the S&P CoreLogic Case-Shiller 20-City Home Price Index rose 1.6% year-on-year in August, marking the smallest annual increase since July 2023 and falling short of market expectations.  August data show U.S. home price growth continuing to slow.  Further proof of this was the 20-city index fell 0.6% month-over-month, marking the largest decrease since December 2022.

New York posted the biggest annual increase in August, 6.1%, while Tampa recorded the weakest performance, with prices falling 3.3% year-over-year.

And the Chicago purchasing managers index for October was better than expected, 43.8, but with 50 the dividing line between growth and contraction, it is the 23rd consecutive month below 50.

As noted above, we were to receive key inflation data today, and a jobs report next Friday, but not with the shutdown.  We will receive ISM manufacturing and service sector readings.

The Atlanta Fed’s GDPNow barometer for third quarter growth is at 3.9%, but they are hobbled by the lack of data.

Freddie Mac’s 30-year fixed-rate mortgage is 6.17%, lowest since Sept. 2024.

—

On the trade front…from the start of the week….

Saturday, President Trump said he will impose an additional 10% tariff on Canada, a punitive measure in response to an ad campaign that he said misrepresented comments by former President Ronald Reagan.

“Because of their serious misrepresentation of the facts, and hostile act, I am increasing the Tariff on Canada by 10% over and above what they are paying now,” Trump posted on his Truth Social platform on Saturday.

The ad campaign, released by the Canadian province of Ontario, uses audio from a 1987 radio address delivered by Reagan, in which he explains that despite putting tariffs on Japanese semiconductors that year, he was committed to free-trade policies.  While tariffs can look patriotic, Reagan said, “over the long run such trade barriers hurt every American worker and consumer,” lead to “fierce trade wars” and result in lost jobs.

Ontario Premier Doug Ford said he would call off the campaign, effective this past Monday.

U.S. tariffs on Canada currently stand at 35%, with energy products at 10%, but goods that comply with the U.S.-Mexico-Canada Agreement, or USMCA, are carved-out of the duties, meaning that about 85% of Canadian exports to the U.S. come in tariff-free.

But steel and aluminum products don’t have that waiver – they’re subject to 50% U.S. tariffs on foreign metals – and Canadian-made cars and trucks are only partially eligible for exemption from Trump’s 25% tariffs on most foreign autos.

Editorial / Wall Street Journal…on the Reagan ad…

“The President said the ad was intended to interfere with the Supreme Court as it considers the legality of his claim that he can levy tariffs on anything he wants, for any amount he wants, whenever he wants.  He immediately declared an end to trade talks with Canada.

“Ontario then said it would pull the ad, but when it still ran during sporting events on the weekend, Mr. Trump escalated with an additional 10% tariff on Canadian goods on top of the taxes he has already imposed.

“The Supreme Court isn’t likely to be influenced by anything other than the law, but Mr. Trump’s Canada eruption is a good argument for the Justices to rein in his tariff power.  The President gets angry at a TV ad and imposes on a whim a 10% tax on Americans who buy goods from their northern neighbor.  Mr. Trump claims he’s not ‘a king,’ but on tariffs he is acting like one, and without a proper delegation from Congress as the Constitution requires.

“It’s striking that Mr. Trump is so worried about a TV spot featuring a President who left the White House nearly 37 years ago.  Don’t you know what time it is, as your apologists like to say, Mr. President?  Perhaps Mr. Trump fears he’s going to lose the tariff case, and maybe he also knows his tariffs are unpopular.

“Mr. Trump is wrong about the Reagan speech, and he was wrong when he said on social media that ‘Ronald Reagan LOVED tariffs for purposes of National Security and the Economy.’  The Gipper was a free trader.  In the 1987 speech, Reagan was trying to explain why he was making an exception to his free-trade policies on semiconductor imports from Japan.

“We remember that speech well, and its purpose was to head off a protectionist surge in Congress. The Gipper delivered it as fear of Japanese economic dominance was reaching its political peak in the U.S. ‘Japan as Number One’ was the title of a popular, and misguided, book of the time….

“It’s a shame to see the Reagan Foundation, of all places, indulging Mr. Trump’s pique with its statement saying the speech was taken out of context.  Anyone who reads the whole speech can see the Gipper favored free trade, with rare exceptions for political pragmatism and national security. Reagan also backed, long before Nafta, a North American free-trade area.

“That couldn’t be more different than Mr. Trump, who wants tariffs as a policy rule, not the exception.  Reagan knew that tariffs are taxes, while Mr. Trump pretends they are paid by foreigners.  Reagan knew protectionist barriers over time breed complacency and lack of innovation.  Mr. Trump thinks he’s making American manufacturing great again, when he is really hurting U.S. manufacturers by burdening them with higher costs. See American companies that use aluminum or steel.

“Mr. Trump has been fortunate that his tariffs haven’t triggered much retaliation, which has spared us from a global trade war.  But the tariffs are doing economic damage by raising costs for consumers and businesses and by dampening animal spirits that should be soaring with his tax bill and deregulation.  He can boast about tariffs all he wants, but he shouldn’t get away with taking Reagan’s trade beliefs in vain.”

Trump said Monday he didn’t anticipate meeting with Canada “for a while.”

“I don’t want to meet with him,” Trump said, referring to Canadian Prime Minister Mark Carney, who was in South Korea for the APEC summit.

But the rest of the week the focus was on the U.S.-China trade talks in Malaysia over the weekend and then the meeting between Presidents Trump and Xi in South Korea Thursday.

Prior to the meeting, U.S. and Chinese trade negotiators lined up an array of agreements for the two leaders to formally unveil, but none addressed the core issues of America’s economic conflict with China.  While markets have rallied on news that the latest trade spat between the two nations is easing, analysts cautioned that the deals now set for them to sign in South Korea ignored foundational problems.

And while Treasury Secretary Scott Bessent pushes China to light a fire under consumer spending and the White House touts Trump’s Asia trip as a ringing success, China’s latest five-year plan (discussed further below) appears to show Trump’s rebalancing dream to be a fantasy, as far as Beijing is concerned.

The Wall Street Journal reported that one aim of the U.S. was to roll back some tariffs on China if Beijing cracks down on the export of chemicals that produce fentanyl, under a trade framework that Trump and Xi were to discuss Thursday.

China was expected to commit to more controls on the export of so-called precursor chemicals used to make fentanyl, and in return the U.S. could cut its 20% fentanyl-related tariff on Chinese goods by as much as 10 percentage points, the Journal reported.

If the U.S. were to lower the fentanyl-tariff on Chinese goods to 10%, it would bring the average tariff on most Chinese imports – currently around 55% – to about 45%.  That would put China’s average tariff rate closer to those of other trading partners, potentially reducing the price competitiveness of goods manufactured outside of China and raising the related attractiveness of Chinese-made products to U.S. buyers.

So what then happened?

President Trump, Thursday, hailed “an amazing meeting” with Xi in Busan, South Korea, as the two brokered a trade truce for seemingly the next year.

“I would say on a scale from 1 to 10, with 10 being the best, I would say the meeting was a 12,” Trump said on Air Force One as he departed.

But there is no signed agreement, with Trump saying the deal could be finalized “pretty soon.” However, he said that the deal will have to be renewed annually.

“Now every year, we’ll renegotiate the deal, but I think the deal will go on for a long time, long beyond the year,” the president said.

As a result of the talks, which Trump had said the day before would last 3-4 hours but only went a little over 90 minutes, the U.S. cut fentanyl-related tariffs on China to 10% from 20% in exchange for Beijing’s help to crack down on exports of chemicals used to make the drug.  Trump said that will bring the average tariff rate on Chinese goods down to 47% from 57%.

[The actual average rate on Chinese goods will fall to 31%, according to Bloomberg Economics, which is well below the 50% U.S. tariffs on many products from Brazil and India – making production in China more attractive than either, at least today.]

China also agreed to suspend its tightened export controls on rare-earth materials for a year, the country’s commerce ministry said Thursday.  Trump said that Xi had also agreed to authorize China to start purchasing “massive amounts” of soybeans from the U.S.

“I thought it was an amazing meeting,” Trump told reporters before boarding Air Force One.

He added that he plans to visit China in April with Xi traveling to the U.S. sometime after.

But there was no discussion on Nvidia’s new Blackwell chip, as Trump had said there would be prior, only that China and Nvidia would talk later among themselves, according to the president, about the chipmaker’s future access to the country.

There was little progress on China’s relationship with Russia and its role in the war in Ukraine.  Trump said he and Xi agreed to “work together” on the issue but added “there’s not a lot more we can do” given China’s long history of purchasing Russian oil.

Also, according to Trump, “Taiwan never came up.”  And there was no meeting with Kim Jong Un.

Back to soybeans, Treasury Secretary Bessent said China is promising to purchase 12 million metric tons of soybeans this season – which would be about 10% of America’s annual crop – and 25 million metric tons next season.

From China:

“China and the U.S. should be partners and friends. That is what history has taught us and what reality needs,” Xi said, according to a report from the state-owned Xinhua News Agency.

At the meeting, Xi added, according to the readout: “Both sides should focus on the bigger picture and the long-term benefits of cooperation, rather than fall into a vicious cycle of mutual retaliation.”

There was no final deal relating to the social video platform TikTok, but China’s commerce ministry said Beijing will work to “properly resolve” the issue, Xinhua reported.

In leaving for home right after the meeting, Trump blew off the Asia-Pacific Economic Cooperation (APEC) summit that was to begin Friday.

His decision to do so risks worsening America’s reputation at a forum that represents nearly 40% of the world’s population and more than half of global goods trade.

On social media Trump celebrated his meeting with Xi in South Korea as a “G2,” a recognition of America and China’s status as the world’s two biggest economies and a play on the multi-national Group of Seven (G7) and Group of 20 (G20) forums.

Trump did attend the annual Association of Southeast Asian Nations (ASEAN) meeting last weekend.

President Xi, according to state-owned Global Times newspaper, is delivering an important speech at APEC.

“ ‘Chinese wisdom’ and ‘Chinese solutions’ have become one of the focal points of attention at this APEC meeting,” an editorial by the newspaper said.

Editorial / Wall Street Journal…on Trump and Xi….

“President Trump and Chinese leader Xi Jinping struck their third trade truce in a year on Thursday, and the best we can say is that the deal averted more economic damage.  Mr. Trump called the deal a ’12 out of 10,’ but markets were nearer to the truth when they yawned.  The deal mostly restores the status quo that prevailed in May.

“Mr. Xi will resume exports of rare-earth minerals, lifting China’s recent suspension, but only for a year.  This means China will be able to exploit its rare-earth leverage again next year.  China will also buy American soybeans again, after what amounted to an embargo that strained American farmers and led to demands for a Washington bailout.  Beijing says it will crack down on fentanyl-precursor production on its shores, a promise that is unenforceable and China isn’t likely to fulfill….

“It looks like Mr. Trump’s main goal was to avoid economic disruption going into an election year.  America’s hostility to Chinese exports is triggering anxiety in Beijing about deflation as China is forced to absorb goods intended for foreign markets.  Rising costs of components and finished goods are weighing on businesses and consumers in the U.S.  and soybean farmers were the first but wouldn’t be the last to get caught in Beijing’s retaliation.

“One lesson here is that trade wars aren’t easy to win, especially against a peer competitor.  China chose to fight back, and Mr. Trump underestimated the leverage China has with its control of global rare-earths minerals.  China’s economy may be less resilient overall than America’s, but Mr. Trump and Republicans have to face voters and Mr. Xi doesn’t.

“Another lesson is that fighting a trade war without allies is a mistake.  America’s potential friends in an economic confrontation with China include Japan, India, South Korea, the Philippines – and Canada, Britain and the European Union.  Mr. Trump has tariffed all of them.

“This left Mr. Trump with less leverage against Mr. Xi than he would have enjoyed with allies behind him.  Alliances still can help now, especially on rare earths, as Mr. Trump recently discovered when he struck a deal with Australia.  Time is short for America and its friends to develop their own mining and refining capacity now that Beijing has learned how effective export restrictions can be.

“The U.S.-China Cold War will continue, and it’s hard to see much that this year’s trade skirmish has accomplished. At best it bought the U.S. some time. If Mr. Trump wants to deter Chinese mercantilism, he needs a new strategy and more allies.”

But just prior to the meeting between Trump and Xi, Trump made news by directing the Pentagon to resume testing nuclear weapons on an equal basis to Russia and China.

“Because of other countries testing programs, I have instructed the Department of War to start testing our Nuclear Weapons on an equal basis.  That process will begin immediately,” he wrote on Truth Social.

The renewal of nuclear weapons testing would end a more than three-decade hiatus on tests that started in 1992*, just one year after the collapse of the Soviet Union and the end of the Cold War.

As described below, a recent Russian test of a nuclear-capable cruise missile received international condemnation, including from Trump, who called it “inappropriate” as he’s trying to reach a deal to end the war between Russia and Ukraine.

China has built up its nuclear arsenal in recent years, reaching about 600 warheads this year, but it conducted its last nuclear test in 1996.  Russia’s test of the missile this weekend didn’t include a detonation.

There was no clarification of Trump’s true intentions from the White House.

Then today, Friday, Trump told reporters aboard Air Force One, “We’re going to do some testing.  Other countries do it. If they’re going to do it, we’re going to,” but then refused to offer more details.

The United States already tests nuclear weapons through computer simulation.  But I really think the president was confused, thinking Russia last weekend actually tested a nuclear device as part of its missile test.

*The last time Moscow detonated a nuclear weapon was 1990, when it was still the Soviet Union.  For China it was 1996. France tested a nuclear weapon in 1996 as well. India and Pakistan conducted two tests each in 1998.  North Korea tested weapons in 2006, 2009, 2013, twice in 2016, and again in 2017. [Defense One]

—

As for the government shutdown…it drags on and on and there is some real-world pain spreading rapidly this weekend across America.

More than two dozen states sued the administration on Tuesday over its recent refusal to fund food stamps during the shutdown, seeking to spare the roughly 42 million people from hunger and financial hardship starting Saturday.

The states, including officials in Arizona, California and Massachusetts, asked a federal judge to force Washington to tap emergency reserve money so that families would not see an interruption to their benefits under SNAP.

Roughly one in eight people in the United States receive food stamps, which average around $187 a month and cost the federal government about $8 billion monthly.  Lawmakers must regularly approve money for it, though SNAP maintains a sizable reserve to cover any shortfalls.

Many congressional Democrats and Republicans had encouraged the Trump administration to use this funding to preserve food stamps into November. But the administration declined on Friday to extend that reprieve, even though the Agriculture Department said weeks ago that it could reprogram the money to prevent benefit cuts.

A federal judge indicated on Thursday that she would likely order the administration to distribute funds the USDA has in a contingency fund, but they would take a few days to get to the states and then the recipients.

A second federal judge issued a similar order today, though more forceful.

Saturday is also the day Americans will be able to log onto the federal Affordable Care Act (ACA) exchange to choose their insurance plans for next year.

Democrats have pointed to Nov. 1 as critical because Americans who rely on the subsidies that are set to expire at the end of the year will see higher premiums for their insurance when they’re picking their plan.

Air traffic controllers missed their first full paycheck on Tuesday, as delays began to pile up with increasing numbers of controllers calling in sick.

Treasury Secretary Bessent said Sunday that the Pentagon has enough unobligated funding to pay troops through October, but funding will run out by the time they’re supposed to be paid on Nov. 15.

President Trump advocated for Republicans to go around any possible negotiations with Democrats by calling on them to invoke the “nuclear option” and eliminate the filibuster, allowing them to reopen the government by a simple majority.

“It is now time for the Republicans to play their ‘TRUMP CARD,’ and go for what is called the Nuclear Option – Get rid of the Filibuster, and get rid of it, NOW!” he said in a post on Truth Social Thursday night.

But Senate Majority Leader Thune has said he doesn’t support weakening the filibuster, while some Republicans have expressed openness to creating a carveout specifically to reopen the government as the shutdown has continued.

A Gallup poll conducted during the first two weeks of October – which coincided with the first two weeks of the shutdown – found that Congress’ approval rating had sunk from 26% to a dismal 15% over the past month.

A Reuters/Ipsos poll of 4,385 U.S. adults published last week found that 50% of respondents blamed Republicans more while 43% blamed Democrats for the shutdown.  And 51% of voters not affiliated with either of the major parties blamed Republicans while 34% blamed Democrats.

A Washington Post/ABC News/Ipsos poll released this week has 45% of U.S. adults saying Trump and the GOP are mainly responsible for the shutdown, with 33% blaming the Democrats.  Among registered voters, 37% now blame Democrats, while 46% blame Republicans.

Three-quarters of U.S. adults say they are “very” or “somewhat concerned” about the shutdown, including 87% of voters who described themselves as “liberal” and 62% of those who said they are “conservative.”

Europe and Asia

Eurostat released a flash estimate for October inflation in the euro area, 2.1%, down from 2.2% in September; 2.4% ex-food and energy, unchanged from the month prior.

Annualized inflation rates….

Germany 2.3%, France 0.9%, Italy 1.3%, Spain 3.2%, Netherlands 3.0%, Ireland 2.7%.

Eurostat also reported a flash estimate for GDP for the third quarter in the EA20, up 0.2% compared with the previous quarter, and up 1.3% vs. a year ago.

Year-over-year…again, flash estimates….

Germany 0.3%, France 0.9%, Italy 0.4%, Spain 2.8%, Netherlands 1.6%.

And Eurostat reported the euro area unemployment rate was 6.3% in September, same as a year ago.

Germany 3.4%, France 7.4%, Italy 6.1%, Spain 11.1%, Netherlands 3.7%, Ireland 4.1%.

Netherlands: A Dutch center-left party appeared to be the biggest winner in national elections on Wednesday, a strong rebuke to the far-right Party for Freedom led by Geert Wilders, but then the latest results revealed a tie.

The center-left Democrats 66 party was projected to win 26 seats in the 150-seat House of Representatives, while the Party for Freedom (PVV) also took 26 seats, a loss of 11 for them.

“The voter has spoken,” Wilders wrote on social media.  “We had hoped for a different result, but kept our backs straight.  We are more combative than ever and still the second and maybe even the biggest party of the Netherlands.”

It will take months for a coalition to form, but D66 leader Rob Jetten seemed a likely possibility for prime minister, though Wilders is saying PVV should get the first shot at putting together a coalition.  That said, Wilders couldn’t form a coalition last time, because no one considers him trustworthy.

China’s PMI readings for October were released, with manufacturing at 49.0 vs. 49.8 prior, and services 50.1 vs. 50.6, not good at all.

Separately, Beijing officially announced the Politburo’s proposal for the nation’s 15th five-year plan, including language that signals strategic support for the private sector and an acceleration of China’s transformation into a financial power, easing market concerns about their positions in the economy over the next five years.

Last week’s communique at the end of the fourth plenum of the Communist Party had offered few details.

The proposal said: “The state should implement the Private Economy Promotion Law to ensure, through legal and institutional means, equal access to production factors, fair participation in market competition, and effective protection of legitimate rights and interests, so as to develop and expand the private economy.”

It vowed to “fully stimulate” the vitality of all types of business entities and encourage the joint development of various forms of ownership.

On accelerating the building of a strong financial nation, the proposal called for the development of science and technology finance, green finance, inclusive finance, pension finance and digital finance.

China should strengthen and modernize its financial system by enhancing regulations and coordination between central and local regulatory authorities, the proposal said while also calling for the acceleration of Shanghai’s development as an international financial center.

Japan’s industrial production figure for September was up a very solid 2.2% for the month, while retail sales rose 0.3%.

The September unemployment rate was 2.6%.

Street Bytes

—Earnings continue to be coming in mostly better than expected, and the Mag 7 stocks reporting this week largely beat expectations.  Apple ($4 trillion) and Nvidia ($5 trillion) exceeded major market cap levels, though Nvidia at week’s end was below $5T.

The major indexes hit new all-time highs Monday and Tuesday (Wednesday for Nasdaq) and on the week, the Dow Jones finished up 0.8% to 47562, while the S&P 500 added 0.7% and Nasdaq 2.2%.

But the S&P MidCap and Russell 200 fell over 1%.

The U.S. isn’t the only market up this year.  Check out these returns around the globe, understanding the S&P 500 is up 16.3% for the year….

London’s FTSE +18.9% thru today
Germany’s DAX +20.3%
Tokyo’s Nikkei +31.4%…first time over 50,000 this week….
South Korea’s Kospi +72.2%!!!

—U.S. Treasury Yields

6-mo. 3.81%  2-yr. 3.60%  10-yr. 4.09%  30-yr. 4.66%

Treasuries fell, yields rose, after Chair Powell’s comments following the FOMC meeting poured cold water on a December rate cut.  The yield on the 10-year rose 9 basis points on the week, while that of the 2-year surged 12 bps.

—Crude oil fell below $60 on Tuesday as traders grew increasingly concerned about a supply glut following signals from OPEC+ that it may raise output again and then it finished the week around that level, $60.87.

—Exxon Mobil posted adjusted earnings of $1.88 a share for the third quarter, beating consensus of $1.82.  Revenue of $85.3 billion fell short, however, of the Street’s $86.5 billion.

Profit declined to $7.55 billion from $8.61bn as the price of crude weakened and costs rose. Falling prices have weighed on Exxon’s results, West Texas Intermediate closing last year at $71.87.

Still, daily production rose to 4.77 million barrels from 4.58 billion barrels a year ago, which was better than expected.

“We delivered the highest earnings per share we’ve had compared to other quarters in a similar oil-price environment,” said CEO Darren Woods, referring to periods in the last decade when prices ranged from $65 to $75 a barrel.

But Exxon is growing its oil production at a time of falling prices – which has historically led to problems for energy companies – but Exxon’s moves have paid off.  It has invested to expand production during good times and bad over the past few years, and investors have mostly been rewarded by the decision.

Rival Chevron posted adjusted earnings of $1.85, topping the $1.71 analysts had anticipated, as total revenue climbed to $49.73 billion in the quarter, also surpassing forecasts.

Adjusted profit fell to $3.54 billion from $4.49 billion a year earlier, driven by lower crude oil prices.

Oil and gas production in the third quarter surged 21% to a record 4.1 million barrels of oil equivalent a day, largely due to the Hess acquisition as well as higher production in Kazakhstan.

—Nvidia’s market value surpassed $5 trillion on Wednesday as CEO Jensen Huang appeared at the chip maker’s technology conference in Washington to talk about the importance of building artificial intelligence infrastructure inside the U.S.  His remarks and the many deals announced using Nvidia chips sent the company’s market value soaring.

Nvidia’s Blackwell AI platform is in full production in Arizona, a nod to President Trump’s cajoling of industry to bring manufacturing back onshore.  Huang told attendees that Nvidia has visibility into more than $500 billion in cumulative revenue from Blackwell over the next five quarters, not counting China.

On China, President Trump said Wednesday, ahead of his meeting with Xi, that “We’ll be speaking about Blackwells,” touting the chip as “super duper” and said Jensen Huang recently brought a version of the accelerator to the Oval Office.

Trump said months ago he’d consider allowing Nvidia to export to China a downgraded version of its Blackwell processor.

Huang also said Nvidia was making inroads in quantum computing, unveiling a new interconnect technology called NVQLink.  It’s a high-speed interconnect linking quantum processors to GPUs and CPUs for error correction.  Huang said 17 quantum computing companies have pledged to support it.

Separately, Nvidia announced a $1 billion stake in Nokia, about 2.9% and named Nokia a partner for commercial-grade AI networking.  It will enable Nokia and other telecommunications firms to roll out AI-native 5G-Advanced and 6G networks through Nvidia’s platform.

And Huang announced a new deal with Uber Technologies and Stellantis in which the companies will build a fleet of 100,000 autonomous robo-taxis powered by Nvidia technology. They’re scheduled to hit the road in 2027.

But then we learned Blackwell was not part of the Trump-Xi discussion Thursday in South Korea, and Nvidia shares fell back below the $5 trillion level.

—Five of the Mag Seven stocks reported third-quarter earnings this week….

Microsoft released strong earnings for its first fiscal quarter, as well as strong cloud revenue growth, but the shares fell about 2%.

For the September quarter, Microsoft reported adjusted earnings of $4.13 per share, compared with the Street’s consensus estimate of $3.67.  Revenue came in at $77.7 billion, which was ahead of analysts’ expectations of $75.4 billion.  Azure revenue rose by 40% versus a 38% analyst estimate.

“Continued strength in the Microsoft Cloud reflects the growing customer demand for our differentiated platform,” Microsoft CFO Amy Hood said in the release.

During the earnings call with investors, Hood provided a revenue guidance range of $79.5 billion to $80.6 billion for the current quarter, which bracketed the current Street estimate of $80.1 billion.  She also said Azure growth will come in at 37%, in line with consensus, adding demand remains “significantly ahead of capacity.”

CEO Satya Nadella said the company’s total AI capacity would grow by over 80% this year with its data center footprint doubling over the next two years.

On Tuesday, Microsoft and OpenAI announced that the artificial-intelligence start-up convert its for-profit subsidiary into a public-benefit corporation of which Microsoft will own 27%. OpenAI will purchase an additional $250 billion of Azure services from Microsoft in the future.

—Meta Platforms shares fell over 10% after the company reported mixed third-quarter earnings results after the close Wednesday.

Earnings per share were $1.05, well behind Wall Street’s consensus after a large, one-time charge in the quarter, but $7.25 per share adjusted, beating expectations.  Revenue reached $51.2 billion, also ahead of forecasts for $49.5 billion, and up 26% on the year.

Meta projects fourth-quarter revenue of $56 billion to $59 billion.

But analysts closely watch Meta’s operating margin, which came in at 40% for the third quarter, down from 43% last year.  Meta’s cost growth is outpacing sales, and the company upped its expense guidance for 2025.

Beyond operating expenses, after raising 2025 guidance for spending on artificial-intelligence data centers twice this year, Meta did it again. It now expects around $71 billion for the year, up from $69 billion.  The company also said that “our current expectation is that capital expenditures dollar growth will be notably larger in 2026 than 2025.”

Unlike the other big AI spenders, all of Meta’s data center investments are for itself, not for renting out the cloud as with AWS, Azure and Google Cloud Services.  CEO Mark Zuckerberg is also upending Meta’s AI research and development. He aims to offer AI to the 3.5 billion average daily users who use at least one of Meta’s apps. The company wants to provide new user experiences like the Meta AI chatbot, while increasing the effectiveness of ad targeting.

“It’s pretty early, but I think we’re seeing the returns in the core business,” Zuckerberg said on the earnings call.  “That’s giving us a lot of confidence that we should be investing a lot more, and we want to make sure that we’re not underinvesting.”

But the reception for Meta’s AI language models that underpin this strategy has been mixed, such as for the company’s Llama 4 models released last April.

–Shares of Alphabet were up sharply Thursday, 5%, after the company reported third-quarter results that easily beat Wall Street estimates

Earnings per share came in at $2.87, well ahead of consensus for $2.26, and up from $2.12 last year.  Revenue in the quarter reached $102.3 billion, higher than expectations of $99.9 billion, and up 16% on the year.

Sales growth in Google Cloud, the unit that rents out servers over the internet, reached 34% in the quarter.  More importantly to some investors, operating profit margins improved to 24% from 17% last year.

Alphabet still gets around 85% of its revenue from high-margin advertising and services, but all eyes were on Google Cloud Services and growth was better than expected.

Like cloud competitors Amazon Web Services and Microsoft Azure, Google is investing heavily in AI data centers, spending $53 billion in 2024 and projecting another $85 billion this year, and about $92 billion in 2026.

–After the close Thursday, Apple then reported it beat fiscal fourth-quarter sales expectations and set the bar high for the holiday season, forecasting revenue to rise 10% to 12% as consumers upgrade to the new iPhone 17.  CFO Kevan Parekh said they see a “double-digit” increase in iPhone sales from a year ago.

If Apple’s prediction comes true, it would be the best revenue quarter and the best iPhone sales quarter in its history, Parekh said on a call with analysts.  For the just ended period, Apple set a new sales milestone of over $400 billion for the full fiscal year ($416bn).

Still despite record sales in India, quarterly iPhone sales and sales in China both missed projections.  Fourth-quarter iPhone sales of $49 billion were up 5% from the year-ago quarter, but fell short of the $50 billion expected.  Overall, fourth-quarter earnings were $1.85 a share and revenue was $102.5 billion, with Wall Street at EPS of $1.77 on revenue of $102.2 billion.

Greater China revenue was $14.49 billion vs. expectations of $16.43bn. CEO Tim Cook said the iPhone 17 is facing supply constraints due to high demand and that while China revenue was light, he expects the region to return to growth in the current quarter.

Tariffs cost Apple $1.1 billion in the fourth quarter, and Apple expects that bill to rise to $1.4 billion in the current quarter.  Cook said the current quarter figure would have been higher had tariffs on imports from China not been lowered to 10% from 20%.

The shares hit record highs this week, with Apple’s market cap now over $4 trillion.

—Amazon reported better-than-expected earnings results and the shares soared over 10%.  For the September quarter, the company reported adjusted earnings per share of $1.95, compared to the Street’s consensus estimate of $1.57.   The earnings included investment gains from AI start-up Anthropic.  Revenue came in at $180.2 billion, also ahead of expectations of $177.9bn.

Revenue for Amazon’s closely watched cloud unit, AWS, was $33 billion versus $32.5 billion analyst estimate.

Amazon said revenue for the current quarter would be between $206 billion to $213 billion, with analysts at $208.4bn.

“We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity,” CEO Andy Jassy said in a press release.

On the earnings call with analysts, Jassy said the company has doubled AWS capacity measured by power from 2022 and is on track to double capacity again by 2027.

The company now expects capital expenditures to come in at $125 billion for the full year, ahead of the current Wall Street forecast for $117.5bn.  It expects capex to increase again next year.

Prior to its earnings release, Amazon announced it would cut about 14,000 corporate jobs as it ramps up spending on artificial intelligence while trimming spending, with more layoffs to come in 2026

Back in June, Jassy said Amazon had more than 1,000 generative AI services and applications in progress or built, but that figure was a “small fraction” of what it plans to build.

Earlier that month Amazon announced that it was planning to invest $10 billion toward building a campus in North Carolina to expand its cloud computing and artificial intelligence infrastructure.

The company instituted rolling reductions in late 2022 and early 2023 that ultimately totaled more than 27,000 corporate employees, as Jassy looked to cut more costs after expanding rapidly during the pandemic.

In June workers were told to relocate to such cities as Seattle; Arlington, Virginia; and Washington DC, which in some cases would require them to move across the country, according to people familiar with the situation.

Amazon employed a total of about 1.55 million people as of June 30.

—Boeing shares fell 4% after the company reported a third-quarter per share loss of $7.14 from sales of $23.3 billion.  Wall Street was looking for a per share loss of $5 from sales of $22.6 billion.

A year ago, in the third quarter of 2024, Boeing reported a $10.44 per share loss from $17.8 billion in sales.  Results then included strike-related expenses and one-time charges.

This quarter, sales rose on higher deliveries. Boeing delivered 160 commercial jets, up from 116 a year ago.  Earnings were hit by a $4.9 billion charge related to the 777x program.

The 777x charge was larger than Wall Street expected, even though CEO Kelly Ortberg had warned of 777x certification delays at a conference in September.  Commercial deliveries of the new jet could have started in late 2026, but now that might slip into 2027.

The 777x program, Boeing’s newest wide-body jet, was launched in 2013 and still isn’t approved for commercial service.  The plane can carry more than 400 passengers in certain cabin configurations.  The 777x completed its first flight in 2020, but the certification process has been bogged down, with Boeing facing more regulatory scrutiny after its problems with its 737 MAX jets.

—TSA checkpoint numbers vs. 2024

10/30…117 percent of 2024
10/29…107
10/28…76
10/27…94
10/26…134
10/25…77
10/24…101
10/23…122

—Tesla’s September sales in Europe were down 10.5% from a year earlier, despite broader gains for electric cars in September. All-electric vehicle sales rose 20% from a year ago in the EU to 167,586 vehicles.  Sales in the broader region rose 21.9% to 260,256 vehicles.  Tesla, in the broader European region sold 39,837.

EV sales accounted for almost 12% of all new U.S. car sales in September, a record according to Cox Automotive, which was due to the expiration of the $7,500 federal EV purchase tax credit.

But Tesla stock keeps rising as trade tensions with China decreased and investors focus on Tesla’s AI opportunities linked to self-driving robo-taxis and humanoid robots.

However, look at Nvidia’s move with Uber and Stellantis.  As I’ve mentioned before, it’s not as if Tesla doesn’t have stiff competition in self-driving and robotics.

—UPS announced third-quarter 2025 adjusted earnings per share of $1.74, with consensus at $1.29.  Revenue slipped 3.7% to $21.42 billion, but came in ahead of the $20.84 billion that Wall Street had modeled.

U.S. domestic revenue slipped 2.6% to $14.22 billion, primarily due to an expected decline in volume.  However, this was partially offset by the higher revenue per piece and air cargo revenue.

International package revenue climbed 5.9% to $4.67 billion, boosted by an increase in average daily volumes.

As of Sept. 30, UPS said it has realized cost savings of about $2.2 billion.  The company expects to achieve $3.5 billion total year-over-year cost savings in 2025.

The shares rose 8%, Tuesday, as the company not only beat expectations, but it said it is well positioned to navigate the upcoming holiday shipping season, along with the restructuring efforts.

Speaking of which, UPS said it has reduced its management workforce by about 14,000 positions so far in 2025, and its operational workforce by about 34,000 positions.  The company also said it closed daily operations at 93 leased and owned buildings during the same period.

“I want to extend my gratitude to all UPSers for their dedication and steadfast commitment to serving our customers,” said Carol Tome, UPS CEO.  “We are executing the most significant strategic shift in our company’s history, and the changes we are implementing are designed to deliver long-term value for all stakeholders.  With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year.”

Editorial / Wall Street Journal

“Teamsters chief Sean O’Brien sold the union’s 2023 contract with United Parcel Service as a big win for workers. Two years later it’s looking like the bad bargain of the century, as UPS said Tuesday it has cut 48,000 jobs this year in a major effort to shave costs it can’t afford, including employee wages and benefits.

“UPS shares rose 8% Tuesday after the shipper reported higher than expected profit during the third quarter thanks to bigger than forecast cost savings.  UPS previously said it would cut 20,000 jobs and close 73 facilities while it shed half of its delivery business for Amazon, its largest customer.  Rising labor costs had slimmed margins for many Amazon deliveries done by UPS.

“The company’s Teamsters contract raised average compensation for full-time drivers to $170,000 from $145,000 over five years.  That’s the equivalent of about $80 an hour.  Teamsters also get up to seven weeks of vacation and don’t have to pay healthcare premiums.  Trouble is, the agreement put UPS at a competitive disadvantage to Amazon and FedEx….

“The Teamsters boss has insisted that its contract requires UPS to create 30,000 jobs. He hasn’t read the fine print – or is misleading his members. UPS merely committed to giving part-time employees a chance to apply for some full-time job openings.  If UPS reduces job openings, workers don’t have an opportunity to fill them.

“Advances in robotics are making it easier for companies to replace workers, and Mr. O’Brien may have a harder time replacing members who lose their jobs.  Workers do best when their employers do well. That’s an eternal lesson that union bosses ignore when they pit ‘labor’ against managers, and workers suffer the most.”

–Gorilla Glass maker Corning on Tuesday forecast fourth-quarter sales above analysts’ estimates, but revenue from its largest business unit that makes fiber optic products fell short of expectations and the shares of the Apple supplier fell about 3%, though the stock was up a whopping 88% so far this year prior.

The company’s optical communications division, which accounts for nearly 40% of total revenue, recorded net sales of $1.65 billion for the third quarter, below analysts’ average estimate of $1.73bn.

Corning is among the optic fiber companies pressured by slower network investment in China, where authorities imposed a 37.9% anti-dumping tariff on imports of Corning’s optical fiber products and other cable providers.

The results come even as Corning deepens its partnership with Apple, which in September said all cover glass for iPhones and Apple Watches will now be made in Kentucky using Corning’s proprietary glass technology.

—Caterpillar reported better-than-expected third-quarter results on Wednesday and the shares soared 12%, as the heavy equipment manufacturer saw sales rise 10% year-over-year, driven by resilient demand across its business segments.

The company posted adjusted earnings of $4.95 per share for the third quarter, significantly exceeding analyst expectations of $4.55.  Revenue reached $17.64 billion, surpassing the consensus estimate of $17.76 billion and marking a 10% increase from $16.1 billion in the same period last year.

The strong performance was primarily attributed to higher sales volume, particularly in equipment sales to end users.  Caterpillar’s Energy & Transportation segment led growth with a 17% increase in sales to $8.4 billion, while Construction Industries rose 7% to $6.8 billion.

—Chipotle on Wednesday cut its full-year sales outlook for the third straight quarter as the company continues to deal with a traffic decline and economic pressure on its core customer.

The company said in its third quarter earnings release it now expects same-store sales to decline in the low-single-digit range this year.  Wall Street expected same-store sales to decline 0.7%, which was below Chipotle’s forecast in July for sales to be flat.

The shares cratered 18% at the open Thursday.

CEO Scott Boatwright said in the company’s earnings release that the chain continues to see “persistent macroeconomic pressures.”  On a call with analysts, the executive expanded, saying that it is slightly “over-indexed” to a younger consumer, who he said are particularly under pressure.

“A particularly challenged cohort is the 25- to 35-year-old age group,” Boatwright said.  “This group is facing several headwinds, including unemployment, increased due loan repayment and slower real wage growth.”  In August, the unemployment rate for Americans ages 20-24 years old stood at 9.2%, up from 7.9% a year ago.

Boatwright said the pullback in all income cohorts seen earlier this year has now widened, “with low- to middle-income guests further reducing frequency.”  Households who make $100,000 or less make up about 40% of its total sales.

For its third quarter, revenue at Chipotle came in $3 billion against $3.02 billion expected, while adjusted earnings per share of $0.29 were inline with the Street’s expectations.  Same-store sales grew 0.3%, less than expected.

—Starbucks reported global sales at stores open for at least a year rose 1%, with U.S. same-store sales flat for the period ended Sept. 28, after six consecutive quarterly declines.

Adjusted earnings were 52 cents a share, missing consensus of 56 cents. Revenue rose 5.5% from a year earlier to $9.6 billion.  “It’s clear that our turnaround is taking hold,” CEO Brian Niccol said.

But net income slumped 85 percent to $133 million as a result of restructuring expenses related to the closure of 627 stores in late September, largely in the U.S., and a reduction of about 900 corporate staff, in addition to the 1,100 jobs the company cut earlier this year.

The company had 16,864 domestic cafes at the end of the period.

—Paramount announced it was laying off 2,000 workers across the media company.  In a memo to employees, CEO David Ellison said the cuts were focused on “addressing redundancies” and to accommodate its shifting priorities.

In the CBS News division, layoffs affected under 100 employees and stretched across the entire news division, according to reports.  The network is cancelling a number of streaming programs.

—Fox Corp. logged higher revenue in its fiscal first quarter, driven by higher engagement and advertising demand across its portfolio.

The broadcaster on Thursday posted a profit of $599 million, or $1.32 a share, compared with $827 million, or $1.78 a share in the same quarter a year earlier.  Adjusted earnings were $1.51 vs. expectations for $1.11 a share.

Revenue rose 4.9% to $3.74 billion, topping the Street’s $3.57bn.

Advertising revenues increased 6%, with Fox’s Tubi streaming service being a big contributor.

—Royal Caribbean fell 9% Tuesday after the company beat earnings expectations and hiked its full-year guidance following strong cruise demand and lower costs in the third quarter.

But investors wanted more from its guidance and the stock, which has had a good year up to this point, fell hard.

The cruise operator reported adjusted earnings of $5.75 on revenue of $5.14 billion. The Street was at $5.69 on revenue of $5.2 billion.

Wall Street was looking for more on the full-year outlook – even as the company increased its guidance. It now expects EPS of between $15.58 and $15.63 but that was below analysts’ consensus of $15.70.

The stock had been up 39% this year.

“Looking ahead, while it’s still early in the planning process, our strong booked position gives us confidence for 2026 and beyond,” CEO Jason Liberty said.

—Halloween candy, it should be no surprise, is 10.8% more expensive this season than last year, according to an analysis of NielsenIQ data.  In 2024, Halloween candy prices only rose 2.1%, the analysis found.

Americans shelled out $7.4 billion in Halloween chocolate and candy sales in 2024, a 2.2% increase from 2023, the National Confectioners Association said.

Though cocoa futures plummeted 46% so far this year, customers are seeing the higher prices now because producers are making chocolate out of those pricey beans harvested in 2024, along with tariffs and inflation costs. And cocoa prices are still way above what they were in 2022.

Foreign Affairs

Russia/Ukraine: Russian missile and drone attacks on Ukraine continued over the weekend, killing four people and wounding 16 others, overnight Saturday.

In Kyiv, two people were killed and nine were wounded in a ballistic missile attack.  Two others were killed in the Dnipropetrovsk region, the acting regional governor saying apartment buildings, private homes and a shop were hit.

The next day, three more were killed and at least 32 others injured in another attack on Kyiv, with Mayor Vitali Klitschko saying two high-rise residential buildings were hit in the strikes.

Ukrainian authorities said nearly 1,200 drones had been launched in the past week alone, at a time when there has been marginal movement along the front lines.

Russian and Ukrainian forces, for example, are still battling over the strategically located city of Pokrovsk.

–In comments to reporters on Tuesday, President Zelensky reiterated Ukraine is ready for peace talks but will not withdraw its troops from additional territory first as Moscow has demanded.

–As alluded to above, Russia tested the nuclear-powered Burevestnik cruise missile last weekend, Moscow’s top general, Valery Gerasimov told President Putin in a televised meeting.

“We have launched a multi-hour flight of a nuclear-powered missile and it covered a 14,000km (8,700-mile) distance, which is not the limit,” the chief of staff said.

The low-flying experimental weapon, first announced in 2018, has been hailed as having a potentially unlimited range and the ability to evade missile defenses.

Western experts have previously cast doubt over the missile’s strategic value and Russian claims of having successfully tested it. Of at least 13 known tests, only two had partial success since 2016, according to an arms control campaign group.

Gen. Gerasimov said the missile was in the air for 15 hours during the test Oct. 21.

A 2021 report by the U.S. Air Force’s National Air and Space Intelligence Center concluded: “A nuclear-powered cruise missile would give Russia a unique weapon with intercontinental range capability.”

However, as the International Institute of Strategic Studies noted the same year, “Its entry into Russia’s inventory arguably hinges not only on overcoming the considerable technical challenge of ensuring the reliable performance of the nuclear-propulsion unit,” the IISS analysts wrote.

“There have been numerous flight-test failures, and an accident resulting in several deaths.”

President Trump issued a warning to Putin after the Russian leader boasted about testing his country’s new “invincible” nuclear missile.

“They know we have a nuclear submarine, the greatest in the world, right off their shore,” Trump told reporters aboard Air Force One on Monday as he prepared to travel to Japan.

Trump was not impressed by Russia’s saber-rattling.  “We test missiles all the time, but you know, we do have a submarine, a nuclear submarine.  We don’t need to go 8,000 miles,” he said.

“They’re not playing games with us. We’re not playing games with them either,” Trump continued, before repeating his demand that Putin end the war in Ukraine.

“I don’t think it’s an appropriate thing for Putin to be saying. By the way, he ought to get the war ended.  A war that should have taken one week is now in its, soon, fourth year.  That’s what he ought to do instead of testing missiles,” Trump said.

Israel/Gaza:  Israeli strikes killed at least 100 people across Gaza overnight Tuesday and Wednesday, local health officials said, in what appeared to be the deadliest day since Israel and Hamas agreed on a cease-fire three weeks ago.

The strikes began late Tuesday after the Israeli government accused Hamas of violating the truce by failing to return the bodies of dead captives and by attacking Israeli forces in Rafah, southern Gaza.  The Israeli military said one of its soldiers had been killed in the Rafah attack.

On Wednesday, the Israeli Defense Minister, Israel Katz, said “dozens of Hamas commanders” had been killed in strikes overnight.  The military said the cease-fire resumed at 10 a.m. local time.

Gaza’s health ministry data does not distinguish between civilians and combatants, but said 35 children were among those killed.

President Trump said on Wednesday that he supported Israel’s strikes in Gaza, saying Israel “should hit back” when its soldiers were killed.  But he said that “nothing is going to jeopardize” the cease-fire.

“Hamas is a very small part of peace in the Middle East, and they have to behave,” he told reporters aboard Air Force One on his way to South Korea.  He added, “If they’re not good, they’re going to be terminated.”

In a statement, Hamas accused Israel of seeking to undermine the cease-fire and criticized the U.S.

Drone footage on Tuesday was released by the IDF that it said showed that Hamas was trying “to create a false impression” about its efforts to locate deceased captives.

The drone footage showed what the Israeli military said were Hamas members faking the discovery of a deceased captive as observers from the Red Cross watched.  The aid group said its staff was unaware that a body had been moved before their arrival.  “It is unacceptable that a fake recovery was staged,” the Red Cross said in a statement.

As of Wednesday, the bodies of 13 of the 28 deceased hostages at the time the ceasefire began had yet to be returned.

–Meanwhile, King Abdullah of Jordan said countries would reject being asked to “enforce” peace in Gaza if deployed under the Trump ceasefire plan.

Under Trump’s 20-point peace plan, Arab states and international partners are to commit stabilization forces that “will train and provide support to vetted Palestinian police forces in Gaza, and will consult with Jordan and Egypt who have extensive experience in this field.”  Hamas is to disarm and give up political control of the territory.

“What is the mandate of security forces inside of Gaza?  And we hope that it is peacekeeping, because if it’s peace enforcing, nobody will want to touch that,” said King Abdullah in an interview with the BBC.

“Peacekeeping is that you’re sitting there supporting the local police force, the Palestinians, which Jordan and Egypt are willing to train in large numbers, but that takes time.  If we’re running around Gaza on patrol with weapons, that’s not a situation that any country would like to get involved in.”

Iran: The head of the UN nuclear watchdog told the Associated Press on Wednesday that Iran does not appear to be actively enriching uranium but that the agency has recently detected renewed movement at the country’s nuclear sites.

Rafael Grossi, director general of the International Atomic Energy Agency, said that despite being unable to access Iranian nuclear sites, inspectors have not seen any activity via satellite to indicate that Iran has accelerated its production of uranium enriched beyond what it had compiled before the 12-day war with Israel in June.

“However, the nuclear material enriched at 60% is still in Iran.  And this is one of the points we are discussing because we need to go back there and to confirm that the material is there and it’s not being diverted to any other use,” Grossi said in an interview.  “This is very, very important.”

Grossi said, however, that inspectors have seen movement around the sites where the stockpiles are stored.  Without additional access, the IAEA has had to rely on satellite imagery, which can only show so much, he said.

Iran and the IAEA signed an agreement last month in Cairo to pave the way for resuming cooperation, including on ways of relaunching inspections of Iran’s nuclear facilities, that has yet to be implemented.

North Korea: Pyongyang’s top diplomat visited the Kremlin on Monday for talks with Russian President Putin, which followed last month’s meeting between the countries’ leaders.  The show of deepening ties came as President Trump visited Asia.

North Korea in recent months has sent thousands of troops and large quantities of military equipment to Russia to support its war effort, a growing alignment that has fueled leader Kim Jong Un’s increasingly assertive foreign policy, as he seeks to break out of isolation and position his country as part of a united front against the U.S.-led West.  North Korea has shunned any form of talks with Washington and Seoul since Kim’s high-stakes nuclear diplomacy with Trump fell apart in 2019 during the American president’s first term.

Pyongyang also test-fired some cruise missiles while Trump was in Asia, offering no response to  Trump’s repeated offers to meet with Kim.

Argentina: President Javier Milei’s party won Argentina’s midterm vote Sunday, a result that will give the libertarian leader a strong foothold in Congress to continue pursuing aggressive free-market policies that have won praise and a financial lifeline from Donald Trjmp.

Milei’s party, La Libertad Avanza, received 41% of votes nationwide, according to the Interior Ministry.  The main opposition party garnered about 32% of the vote.

Milei claimed enough seats in parliament to protect his veto power, as well as a base to pursue legislative priorities like tax, labor and pension reforms as he seeks to overhaul the nation’s beleaguered economy.

“Argentines demonstrated they don’t want to return to the model of a failure,” a jubilant Milei said in Buenos Aires on Sunday night.  “This is the most reformist Congress in the history of Argentina.”

But he still has to build a workable coalition.

Venezuela/The Caribbean: The U.S. military killed 14 more people accused of smuggling drugs on boats, Defense Secretary Pete Hegseth said Tuesday. 

The strikes were on four boats on Monday in the administration’s growing campaign off the Central and South American coasts.

Hegseth said that the strikes – three of them – took place in international waters and that there had been one survivor. They bring the overall death toll to 57 in the campaign, which began in September.

“The four vessels were known by our intelligence apparatus, transiting along known narco-trafficking routes and carrying narcotics,” Hegseth said in a post on social media.  He said eight men were on the boats in the first, four men were on the boat in the second strike, and three men were on the boats that was struck third.

No locations were given.

Trump has falsely asserted that each destroyed boat saves 25,000 American lives.  In reality, about 100,000 Americans die each year from drug overdoses, but most of those deaths are from fentanyl, which comes from labs in Mexico.  South America produces cocaine.

The military then said Wednesday that another four people were killed, the strike taking place in international waters and directed at a boat that Hegseth said was operated by a “designated terrorist organization” in the eastern Pacific Ocean.

Random Musings

–Presidential approval ratings….

Gallup: 41% approve of President Trump’s job performance, while 54% disapprove.  33% of independents approve (Oct. 1-16).

Rasmussen: 45% approve, 53% disapprove (Oct. 31). [Once again, I received a call from the Rasmussen survey folks this week, Monday, and I always take the call and answer their questions, which are great.  It’s the only survey I participate in.]

—This coming week is all about three elections…New York City’s mayoral race, and the gubernatorial races in New Jersey and Virginia. [I guess you could include the California redistricting ballot initiative on the list.]

Us folks in New Jersey are watching the race between Democrat Mike Sherrill and Republican Jack Ciattarelli, which virtually all the recent polls have Sherrill up about 5 points, but I’d call it a toss-up.

One poll released this week, the A2 Insights online, shows Sherrill at 51.4%, while Ciattarelli is at 46.5%.

But this same survey in August had Sherrill up 55% to 40%.

And then we had an Emerson College/Pix 11/The Hill survey which found Sherrill up only 50% to 48%.

One thing we do know that is factual…more Democrats have voted in the round of ‘early voting’ than Republicans, and the state is overwhelmingly Democrat by registration.  A ton of people, like yours truly, have also voted absentee, and they have skewed Democrat.

In Virginia, its Democrat Abigail Spanberger vs. Republican Winsome Earle-Sears, and a Wason Center at Christopher Newport University survey had Spanberger leading Earle-Sears 50% to 43%.

In New York City, democratic-socialist assemblyman Zohran Mamdani held a 21-point lead over former governor Andrew Cuomo in a mid-October Fox News poll, but it has tightened considerably, according to a new Suffolk University survey released this week which shows Cuomo behind by 10 points, 44% to 34%, with Republican Curtis Sliwa in third at 11%.

A Quinnipiac University poll has Mamdani at 43%, Cuomo 33% and Sliwa 14%.

But a new Marist poll has it 48% Mamdani, 32% Cuomo, and 16% Sliwa.

And an Emerson/Pix 11/The Hill survey has Mamdani drawing 50%, to only 25% for Cuomo, and 21% Sliwa.

Boy, it’s going to be interesting to see who got it right.

—Texas Attorney General Ken Paxton announced Tuesday he is suing the makers of Tylenol claiming the companies failed to warn consumers about the risks of taking the drug while pregnant.

Paxson filed a lawsuit against pharmaceutical giant Johnson & Johnson and its spin-off company Kenvue, claiming the companies’ withheld information about Tylenol’s links to autism and attention deficit hyperactivity disorder, violating the state’s consumer protection laws.

This is the first lawsuit by a state that seizes on President Trump’s allegations that the use of acetaminophen products like Tylenol during pregnancy could cause neurodevelopmental disorders.   The issue has been a longstanding concern among some followers of Robert F. Kennedy Jr., the nation’s top health official, but the idea gained traction with Mr. Trump’s remarks.

Kenvue (the company based on my street), has repeatedly defended Tylenol’s safety and rejected Trump’s claims about the drug’s use during pregnancy and autism.

“We will defend ourselves against these baseless claims and will respond per the legal process,” Melissa Witt, a spokeswoman for Kenvue, said on Tuesday.  “We stand firmly with the global medical community that acknowledges the safety of acetaminophen and believe we will continue to be successful in litigation as these claims lack legal merit and scientific support.”

In other litigation, Johnson & Johnson has said that it had always acted responsibly in warning consumers about Tylenol’s proven risk of liver damage when taken in excess.

–Tuesday, House Speaker Johnson said he doesn’t believe President Trump has any real inclination to attempt to defy the Constitution and run for a third term.

“There is the 22nd Amendment,” he told reporters at a news conference.  “I think the president knows.  And he and I have talked about the constrictions of the Constitution.”

The comments follow former West Wing aide Steve Bannon’s recent suggestions in an interview with The Economist that “there is a plan” for Trump to run for the White House again in 2028.

Still, Johnson said Trump “has a good time” trolling Democrats, “whose hair is on fire at the very prospect.”

“I don’t see a way to amend the Constitution,” Johnson said. “But I can tell you that we are not going to take our foot off the gas pedal.  We’re going to deliver for the American people, and we’ve got a great run ahead of us left – four strong years.”

Addressing reporters on Air Force One en route to South Korea Wednesday, Trump said, “If you read (the Constitution), it’s pretty clear. I’m not allowed to run. It’s too bad.”

—French police have made their first arrests in connection to the heist at the Louvre Museum, according to prosecutors, including one man who was intercepted before he could board a flight to flee France.

Paris Prosecutor Laure Beccuau said police detained the men Saturday evening after learning that one was planning to leave France from Charles de Gaulle Airport on the northern outskirts of the capital.  Beccuau didn’t provide further details on the man or anyone else police detained.

Beccuau criticized “informed individuals” for disclosing details to French media that reported earlier on the arrests, suggesting this undercut investigators who have spent the past week scrambling to track down the thieves and recover the jewels before they’re sold off.

The eight pieces of jewelry from France’s royal and Napoleonic-era collections valued were valued at around $102 million, though French officials say that sum doesn’t begin to capture the jewels’ historical value to France.

Police can hold the men in custody for up to 96 hours before deciding whether to bring preliminary charges against them or release them.

Meanwhile, selling the jewels intact would be difficult because the international media attention the heist has received has made the pieces easy to identify as stolen goods – if they are kept in their original form.

But the jewels included hundreds of diamonds, along with emeralds and sapphires the size of lozenges.  Those stones can be recut to make them less identifiable.

Prosecutor Beccuau then announced five more people have been arrested Thursday, the five detained late Wednesday night in separate police operations in Paris and surrounding areas.

One is suspected of being part of the four-person team that robbed the Apollo Gallery.  But Beccuau said, “Searches last night and overnight did not allow us to find the goods,” she said.

—The death toll in a massive police raid on a notorious drug gang in Rio de Janeiro rose Wednesday to 119 killed, including four policemen, Brazilian police said.

Tuesday’s operation by 2,500 police and soldiers sparked clashes in two low-income neighborhoods of the city.

Many decried Brazil’s latest example of the excessive use of force.

—King Charles stripped his younger brother Andrew of his title of prince and forced him out of his Windsor home, seeking to distance the royals from him over his links to the Jeffrey Epstein scandal.  Andrew’s banishment was welcomed by UK politicians, papers and the public.

—Last Sunday was the 200th anniversary of the Erie Canal.  As George Will wrote in an op-ed for the Washington Post, citing Daniel Walker Howe’s “What Hath God Wrought: The Transformation of America, 1815-1848” in the Oxford History of the United States, the canal was “one of the most important achievements of national economic integration,” and it was completed two years ahead of schedule and under budget – not by the national government, but by one state, which the canal would transform into the Empire State.

Will: “Soon it was carrying twice the value of goods floating down the Mississippi to New Orleans. Horses or mules could pull a wagon weighing two tons, walking on the canal’s towpath, and pull a barge weighing 50 tons.

From Buffalo to Albany, where it met the Hudson River, the canal “radically accelerated social change, discomfiting some along its route.  The sudden disorienting growth of cities – e.g., Rochester, Syracuse, Utica – stirred religious intensity in what was called a ‘burned-over’ region.”

“Headlines announced the arrival of Long Island oysters in Batavia, a town in western New York.  By 1850, the price of a wall clock had plunged from $60 dollars to $3. Howe: Largely because of lower transportation costs, ‘changes from the rustic to the commercial that had taken centuries to unfold in Western civilization were telescoped into a generation in western New York state.’”

The canal also created New York City as a financial center. One day in 1824, Howe writes, there were 324 ships in New York harbor.  One day in 1836, there were 1,241.  Through the city’s port, America exported grain and revolution.

Will: “Railroads soon eclipsed the importance of canals, but before they did, in 1849 the U.S. government granted patent No. 6469 for an invention that facilitated the passage of canal traffic ‘over bars, or through shallow water.’ The inventor was a former one-term congressman from Sangamon County, Illinois, who promoted canals for developing central Illinois.

“Abraham Lincoln could not have anticipated the importance of the Erie Canal supplanting much Mississippi River commercial traffic, and stimulating the Midwest’s population growth. This changed the primary axis of U.S. commerce from North-South to West-East, fueling Northern economic dynamism, with consequences seen at Appomattox.  Some ditch.”

—Hurricane Melissa made landfall along the southwestern coast of Jamaica on Tuesday with catastrophic wind speeds of 185 mph (reported gusts of 220 mph!) and life-threatening storm surge, along with 15-30 inches of rain, as much as 40 in isolated locations, which led to landslides and severe flooding.

Melissa broke the old strongest Jamaican hurricane landfall record set by Hurricane Gilbert in 1988 (130 mph winds).

It was the strongest Atlantic hurricane landfall since Dorian (2019); Dorian also making landfall with 185 mph winds when it hit Abaco Island in the Bahamas.

Many communities were expected to be cut off by floodwater, landslides and debris-covered roadways for weeks, and cell service was down in many spots, leaving residents with no way to call for help.  Seventy-seven percent of Jamaica was without power.  There were also about 25,000 tourists still on the island.

The death toll in the Dominican Republic, Haiti, and Jamaica is over 50 and expected to rise further, with 19 deaths as of this morning in Jamaica.

You’ve seen the videos and reports from Jamaica.  Pray for them, as the situation in the western region is deteriorating rapidly without food, shelter and water…and the heat.

—

Pray for the men and women of our armed forces…and all the fallen.

Slava Ukraini.

God bless America.

—

Gold $4008
Oil $60.87

Bitcoin: $109,820 [4:00 PM ET, Friday]

Regular Gas: $3.04; Diesel: $3.68 [$3.13 – $3.57 yr. ago]

Returns for the week 10/27-10/31

Dow Jones  +0.8%  [47562]
S&P 500  +0.7%  [6840]
S&P MidCap  -1.6%
Russell 2000  -1.3%
Nasdaq  +2.2%  [23724]

Returns for the period 1/1/25-10/31/25

Dow Jones  +11.8%
S&P 500  +16.3%
S&P MidCap  +4.0%
Russell 2000  +11.2%
Nasdaq  +22.9%

Bulls 57.7
Bears 13.5…lowest since March 2024

Hang in there.

Brian Trumbore