The few data points that have been released have indicated increasing economic strength. The ISM Service Sector, which represents about 70% of the economy, expanded in October by the fastest pace in eight months. The reading exceeded all estimates.
Unfortunately, the rebound in demand was also accompanied by more pronounced inflationary pressures as the group’s prices-paid index rose to a three-year high. Is this the result of tariffs? Is corporate America no longer absorbing the increased costs in order to maintain market share?
The ADP Employment Survey indicated that private sector payrolls increased by 42,000 in October, also exceeding all published estimates. Analysts were projecting a 30,000 gain. Moreover, September’s job gains were revised modestly higher.
Speaking of tariffs, yesterday the Supreme Court considered arguments that the Administration has exceeded his constitutional authority with many of his sweeping tariffs.
Hanging in balance are tens of billions of dollars in duties now paid monthly by American importers and the President’s ability to reshape global flows of goods and capital.
Legal scholars say the implications extend far beyond the economic consequences to the very reach of the presidency.
If the President wins, he would have virtually unlimited power to invoke emergencies to impose taxes and intervene in the economy. A loss would undermine the President’s favorite economic tool and the refund of billions already collected.
Bloomberg opines the Supreme Court “appeared skeptical,” with key justices suggesting he had overstepped his authority. A ruling is not expected for weeks or even months, raising the prospect of uncertainty extending throughout the holidays and into the new year.
Changing topics, volumes will be written about Tuesday’s election. Perhaps something of considerable significance, according to Politico, the traditional lower socio-economic voters did not overwhelming vote for Mamdani. His overwhelming strength was in white college educated and mostly unemployed females to age 40 and college educated people to age 30.
Commenting on yesterday’s equity markets, led by the techs stocks staged a moderate rebound. Treasuries sold off across the curve, the result of the data.
Last night the foreign markets were mixed. London was down 0.05%, Paris down 0.57% and Frankfurt down 0.09%. China was up 0.97%, Japan up 1.34% and Hang Seng up 2.12%.
Futures are flat. The 10-year is up 2/32 to yield 4.15%.
