Raphael Stevens

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    What betting markets got right and wrong about Trump’s victory

    THE RISE of political polling and subsequent crackdowns on sports gambling drove political betting markets in America underground after the second world war. They remained in the shadows until last month, when a federal court cleared Kalshi, a betting exchange, to offer political bets to Americans. More than $400m has since been wagered on the site. The sums bet globally on other prediction sites reportedly tot up to several billion dollars. How did the speculators fare in America’s election? More

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    Big Macs, strawberry jam and the wealth of nations

    WHEN CHINA entered the Korean war in 1950, America was keen to take the measure of its new adversary. The government asked William Hollister to estimate the size of its GDP, relative to America’s own. Economists are often accused of giving two answers to any question. Hollister gave three. More

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    India is undergoing an astonishing stockmarket revolution

    It is the largest-ever experiment in participatory capitalism. As India’s stockmarket has surged, households have scrambled to stake a claim in its success. With barriers to entry falling, roughly 100m people not far above the poverty line have become capitalists, owning tiny stakes in publicly traded companies. One in five households today holds shares, up from one in 14 just five years ago. The number is set to rise further. According to India’s financial regulator, a new mutual fund with a minimum monthly contribution of 250 rupees ($3) will soon be launched. More

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    Barbarians on the porch

    Two private-equity bros walk into a Nobu. One thinks ordinary people investing in private markets is a swell idea. Stockmarkets are so concentrated that buying the S&P 500 index is just a bet on a handful of giant technology firms, he says. Everyone needs diversification. Private credit is here to stay and the bond market isn’t even that liquid. That corners of finance previously open only to institutions and the very rich are now accessible to more individuals is a good thing. Imagine the fees. More

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    Sanctions are sinking Russia’s flagship gas project

    The West’s economic weapons are missing their target. Last month Russia exported near-record volumes of oil, at a decent price. But there is one exception. After shutting its main gas pipeline to Europe in 2022, Russia had hoped that Arctic LNG 2, an ultra-modern export facility, would open big new markets. Yet last month the plant suspended operations until next summer, for want of ships and buyers. Sanctions are nipping it in the bud. More

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    Trump win and threat of more tariffs raises expectations for more China stimulus

    Donald Trump has threatened to impose additional tariffs of 60% or more on Chinese goods sold to the U.S. on the campaign trial.
    These levies could come at a pivotal time for Beijing. The country is relying more on exports for growth as it battles with a real estate slump and tepid consumer spending.
    It could reduce China’s exports by $200 billion, causing a 1 percentage point drag on GDP, said Zhu Baoliang, a former chief economist at China’s economic planning agency.

    Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019.
    Aly Song | Reuters

    BEIJING — Donald Trump’s 2024 presidential win has raised the bar for China’s fiscal stimulus plans, expected Friday.
    On the campaign trial, Trump threatened to impose additional tariffs of 60% or more on Chinese goods sold to the U.S. Increased duties of at least 10% under Trump’s first term as president did not dent America’s position as China’s largest trading partner.

    But new tariffs — potentially on a larger scale — would come at a pivotal time for China. The country is relying more on exports for growth as it battles with a real estate slump and tepid consumer spending.
    If Trump raises tariffs to 60%, that could reduce China’s exports by $200 billion, causing a 1 percentage point drag on GDP, Zhu Baoliang, a former chief economist at China’s economic planning agency, said at a Citigroup conference.

    Since late September, Chinese authorities have ramped up efforts to support slowing economic growth. The standing committee of the National People’s Congress — the country’s parliament — is expected to approve additional fiscal stimulus at its meeting this week, which wraps up Friday.
    “In response to potential ‘Trump shocks,’ the Chinese government is likely to introduce greater stimulus measures,” said Yue Su, principal economist at the Economist Intelligence Unit. “The overlap of the NPC meeting with the U.S. election outcome suggests the government is prepared to take swift action.”
    She expects a stimulus package of more than 10 trillion yuan ($1.39 billion), with about 6 trillion yuan going towards local government debt swaps and bank recapitalization. More than 4 trillion yuan will likely go towards local government special bonds for supporting real estate, Su said. She did not specify over what time period.

    Stock market divergence

    Mainland China and Hong Kong stocks fell Wednesday as it became clear that Trump would win the election. U.S. stocks then soared with the three major indexes hitting record highs. In Thursday morning trading, Chinese stocks tried to hold mild gains.
    That divergence in stock performance indicates China’s stimulus “will be slightly bigger than the baseline scenario,” said Liqian Ren, who leads WisdomTree’s quantitative investment capabilities. She estimates Beijing will add about 2 trillion yuan to 3 trillion yuan a year in support.
    Ren doesn’t expect significantly larger support due to uncertainties around how Trump might act. She pointed out that tariffs hurt both countries, but restrictions on tech and investment have a greater impact on China.
    Trump, during his first term as president, put Chinese telecommunications giant Huawei on a blacklist that restricted it from using U.S. suppliers. The Biden administration expanded on those moves by limiting U.S. sales of advanced semiconductors to China, and pressuring allies to do the same.
    Both Democrats and Republicans supported the passage of those newer export controls and efforts to boost semiconductor manufacturing investment in the U.S., Chris Miller, author of “Chip War,” pointed out earlier this year. He expected the U.S. to increase such restrictions regardless of who won the election.
    China has doubled down on bolstering its own tech by encouraging bank loans to high-end manufacturing. But the country had long benefited from U.S. capital as well as the ability to use U.S. software and high-end parts.
    Republicans gained a majority in the Senate for the next two years, according to NBC News projections, though control of the House of Representatives remains unclear.
    “If the Republican Party gains control of Congress, protectionist measures could be accelerated, amplifying impacts on the global economy and presenting significant downside risks,” Su said.
    She expects Trump will likely impose such tariffs in the first half of next year, and could speed up the process by invoking the International Emergency Economic Powers Act or Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% in response to a serious balance-of-payments deficit.

    U.S. data shows that the trade deficit with China narrowed to $279.11 billion in 2023, from $346.83 billion in 2016.
    Su estimated that a 10% tariff increase on Chinese exports to the U.S. could reduce Beijing’s real GDP growth by an average of 0.3 to 0.4 percentage points in the next two years, assuming other factors remain constant.
    China’s exports to the U.S. fell by 14% last year to $500.29 billion, according to customs data on Wind Information. That’s still up from $385.08 billion in 2016, before Trump was sworn in for his first term.
    Meanwhile, China’s annual imports from the U.S. climbed to $164.16 billion in 2023, up from $134.4 billion in 2016, the Chinese data showed.
    Other analysts believe that Beijing will remain conservative, and trickle out stimulus over the coming months rather than release a large package on Friday.
    China’s top leaders typically meet in mid-December to discuss economic plans for the year ahead. Then, officials would announce the growth target for the year at an annual parliamentary meeting in March.
    “China will likely face much higher tariff from the U.S. next year. I expect policy response from China to also take place next year when higher tariff is imposed,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note Wednesday afternoon.
    “I also don’t think the government will change the policies they already proposed to the NPC because of US election,” he said.

    China’s growing global trade influence

    Regardless of tariffs, China remains an export powerhouse to markets outside the U.S.
    “Chinese exports have indeed shifted a bit in the past few years in terms of destination, with the U.S. representing less than 15% of total Chinese exports in 2023, compared with nearly 18% on average in the 2010s,” Francoise Huang, senior economist for Asia-Pacific and global trade at Allianz Trade, said in September.
    “While China has lost market share in the U.S., it’s clearly been gaining in other places,” she said. “For example, China now represents more than 25% of ASEAN imports, compared with less than 18% in the 2010s.”
    China’s exports have also grown to countries that sell to the U.S., a Federal Reserve report found in August.
    — CNBC’s Dylan Butts contributed to this report. More

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    E.l.f. shares soar as cosmetics retailer raises guidance after posting 40% sales gain

    E.l.f. Beauty grew sales by 40% in its second fiscal quarter, leading it to raise its full year earnings and sales guidance.
    “Not only are we the No. 1 brand amongst Gen Z by a pretty wide margin, but we’re also the most purchased brand amongst Gen Alpha and millennials,” CEO Tarang Amin told CNBC.
    Amin said the company is well-positioned to weather increased tariffs that could be imposed under President-elect Donald Trump.

    e.l.f Beauty power grip primer.
    Courtesy: e.l.f Beauty

    E.l.f. Beauty raised its full-year guidance on Wednesday after posting a 40% growth in sales. 
    Shares of the company rose nearly 10% in after-hours trading.

    The cosmetics retailer’s earnings came in well ahead of expectations on the top and bottom lines and it now expects sales to be between $1.32 billion and $1.34 billion during fiscal 2025, ahead of the $1.30 billion analysts had expected, according to LSEG. 
    Here’s how E.l.f. did in its second fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

    Earnings per share: 77 cents adjusted vs. 43 cents expected
    Revenue: $301 million vs. $286 million expected

    The company’s reported net income for the three-month period that ended Sept. 30 was $19 million, or 33 cents per share, compared with $33 million, or 58 cents per share, a year earlier. Excluding one-time items, E.l.f. saw earnings of $45 million, or 77 cents per share.  
    Sales rose to $301 million, up about 40% from $216 million a year earlier. 
    E.l.f. raised its full-year revenue guidance from a previous range of $1.28 billion to $1.3 billion and also raised its adjusted earnings guidance. The retailer is expecting adjusted earnings to be between $3.47 to $3.53 per share, up from a prior outlook of between $3.36 and $3.41 per share. Analysts had been looking for earnings guidance of $3.51, according to LSEG. 

    The cosmetics company has been on a tear over the past couple of years thanks to its viral marketing and its prowess in winning over young shoppers with its value versions of prestige favorites. 
    “We’re seeing multi-generational appeal on E.l.f. Not only are we the No. 1 brand amongst Gen Z by a pretty wide margin, but we’re also the most purchased brand amongst Gen Alpha and millennials,” CEO Tarang Amin said in an interview with CNBC. “We’re picking up consumers in pretty much every age and income cohort, which is great to see, and I think just talks to the strength of our strategy and the quality of our products.” 
    Amin said that success has led both Target and Walgreens to plan to expand the shelf space they allot for the retailer starting in the spring. 
    During the quarter, E.l.f.’s selling, general and administrative costs rose by $74 million to $186.1 million, or 62% of net sales, but it still managed to post a 71% gross margin, an increase of 0.4 percentage points from the year-ago quarter. 
    Amin attributed the increase in margin to favorable foreign exchange rates, previously enacted price increases internationally and its overall value proposition. 
    “Our ability to engineer prestige quality at these extraordinary prices has been the real driver, but most of our margin progress over the years has been through our innovation mix,” Amin said. “As we introduce a new one of our holy grails, it gives us the opportunity to inch up margin a little bit while still offering an incredible value.” 
    The company has also been building out its international sales, which now make up about 21% of overall revenue. 
    Amin said its exposure to markets outside of the U.S. will help soften the blow from any tariff hikes that could come under President-elect Donald Trump.

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    What Trump’s election to the White House could mean for EVs

    President-elect Donald Trump’s victory over Vice President Kamala Harris is expected to send the U.S. electric vehicle industry into a period of uncertainty.
    Republicans, led by the former president, have largely condemned EVs, claiming they are being forced upon consumers and that they will ruin the U.S. automotive industry.
    Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency and incentives to promote production and adoption of EVs.

    Production is now set to begin at the former Detroit-Hamtramck assembly plant, less than two years after GM announced the massive $2.2 billion investment to fully renovate the facility to build a variety of all-electric trucks and SUVs.
    Photo by Jeffrey Sauger for General Motors

    DETROIT – President-elect Donald Trump’s victory over Vice President Kamala Harris is expected to send the U.S. electric vehicle industry into a period of uncertainty.
    Republicans, led by the former president, have largely condemned EVs, claiming they are being forced upon consumers. Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency as well as incentives to promote production and adoption of the vehicles such as the Biden administration’s Inflation Reduction Act of 2022.

    Auto industry insiders and other officials have said it would be difficult for Trump to completely gut the IRA, but he could defund or limit EV subsidies through executive orders or other policy actions.
    Several people said they would expect Trump to target federal consumer credits that currently offer up to $7,500 for the purchase of an EV rather than target industrial production credits for companies.
    “The IRA will probably have some adjustments … I don’t think the IRA will go away,” David Rubenstein, co-founder and co-chairman of The Carlyle Group investment firm, told CNBC on Wednesday. “It has some really good things in it that I think Republicans and Democrats will like.”

    Many of the investments into EV production under the IRA having been taking place in Republican states such as Ohio, South Carolina and Georgia.
    Automotive executives are also quick to say they don’t base investment decisions on who holds the White House, but there are natural adjustments with new administrations.

    “Anytime there’s an administration change, it’s an interesting time for the industry because we have to go through new policies and regulations and have to bring new people up to speed on who we are and what we do,” David Christ, group vice president and general manager of the Toyota Division in North America, said Wednesday during an Automotive Press Association event near Detroit. “Administrations sometimes change every four years, so we don’t really do a lot of modifying the strategy.”

    Winners and losers?

    Several Wall Street analysts have speculated legacy automakers — specifically the “Detroit” companies General Motors, Ford Motor and Chrysler parent Stellantis — would be the biggest winners of a second Trump term and Republican control of Congress.
    “We see F and GM as the main beneficiaries from the Trump administration,” BofA Securities analyst John Murphy said in a Wednesday investor note. “The current environmental regime would pressure the core business of legacy [automakers, trucks,] to decarbonize by the end of the decade while shifting quickly to an EV portfolio.”
    GM’s aspirations for an “all-electric future” and profitable EV business in the near term are highly reliant on federal tax credits.
    Analysts had indicated EV startups such as Rivian Automotive and Lucid Group would benefit more with a Democratic win.
    Toyota could also be a winner if EV regulations are reduced or eliminated, as the Japanese automaker has been slow to invest in all-electric models compared to hybrid vehicles.
    Shares of GM and Ford closed Wednesday up 2.5% and 5.6%, respectively. Stock prices for Toyota and Stellantis, which is experiencing significant problems in the U.S., were essentially level. Lucid and Rivian were each down, 5.3% and 8.3%, respectively.

    Stock chart icon

    Shares of automakers after President-elect Donald Trump’s victory.

    An outlier is U.S. electric vehicle leader Tesla. CEO Elon Musk heavily campaigned in swing states for Trump, who has discussed making the billionaire a government efficiency czar.
    Shares of Tesla soared Wednesday by 15% and earlier notched a new 52-week high.
    “We see RIVN and LCID challenged, which is largely reflected in the stocks,” Murphy said. “We don’t expect meaningful issues for TSLA since it has already reached profitability and will introduce more entry level products that could be attractive for the larger public.”
    Several automakers did not immediately return request for comment after NBC News and several other media outlets called the election for Trump.
    Others such as the Detroit automakers and Hyundai Motor congratulated Trump and the newly elected officials across all levels of government.
    “We look forward to working with the new Administration and Congress on policies that strengthen the U.S. automotive industry, which supports 9.7 million American jobs and drives more than $1 trillion into the economy each year,” Ford said.
    “We congratulate and look forward to working with the President-elect, Congress, and all elected officials to ensure that the U.S. continues to lead the world in technology and innovation, to the benefit of American workers and consumers alike,” GM said.

    California EV mandates

    Trump is also expected to renew a battle with California and other states who set their own vehicle emissions standards, including requirements for sales of all-electric vehicles.
    Current requirements under the “Advanced Clean Cars II” regulations of 2022 call for 35% of 2026 model year vehicles, which will begin to be introduced next year, to be zero-emission vehicles. Battery-electric, fuel cell and, to an extent, plug-in hybrid electric vehicles qualify as zero emission.
    Before the election, automotive officials said regardless of who won the White House, many automakers will push for the mandates to be postponed.
    The California Air Resources Board reports 12 states and Washington, D.C., have adopted the rules; however, roughly half of them did so starting with the 2027 model year. They are part of CARB’s Advanced Clean Cars regulations that require 100% of new vehicle sales in the state of California to be zero-emission models by 2035.
    EVs made up 10% or more of local market shares in just 11 states and the District of Columbia to begin this year, according to the Alliance for Automotive Innovation, a trade association and lobby group that represents most major automakers operating in the U.S.
    Auto executives and industry experts also expect Trump could roll back or freeze the Corporate Average Fuel Economy, or CAFE, standards for model years 2027-2031.

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