Economy

The firm predicts strong fiscal tailwinds, reduced regulatory measures, energy permitting reform, and continued tech restrictions as some of the key factors that will likely occur regardless of the election’s outcome.The report indicates that a significant portion of funding from the Biden era for infrastructure, semiconductor production, and energy transition is still unspent, with more than 75% of the allocated funds available through the end of September.Tax credits under the Inflation Reduction Act (IRA) are also largely untapped, with around eight years left to utilize them. Raymond James estimates these represent over $800 billion in appropriated funds and more than $500 billion in tax credits yet to impact the U.S. economy.“There may be attempts to repeal portions of the IRA in a Trump victory, but we remain skeptical,” analysts led by Ed Mills said in the report. “Overall, we expect to see a strong fiscal tailwind to the economy regardless of the outcome of the election.”Energy permitting reform is also on the horizon, with bipartisan support and increasing energy demands from the AI industry providing impetus for legislative change.Raymond James is closely monitoring the debt limit debate in 2025, which could serve as a legislative vehicle for passing energy permitting reforms. Moreover, recent Supreme Court decisions are expected to streamline environmental reviews under the National Environmental Policy Act, expediting the permitting process.The report further suggests that four years from now, there will be less regulation across industries due to the Supreme Court’s recent rulings.Decisions such as the overturning of the ” Chevron (NYSE:CVX) deference” and the establishment of the “major questions” doctrine will curb the expansion of regulatory power, according to the report.“The case that has re-opened the statute of limitation on all regulations will be the avenue to strike existing rules. This will take time, but will be a benefit to heavily-regulated industries,” analysts noted.Meanwhile, support for critical minerals is anticipated to grow, with a focus on reshoring supply chains and securing domestic production of minerals vital for national security. While this initiative is still developing, it may gain similar backing as the semiconductor industry has received from Washington, D.C.Another bipartisan issue, tech restrictions, particularly concerning sales to China, are expected to continue.Analysts note that a Trump administration might pose more risks to the sale of legacy technology, whereas a Harris administration would likely maintain a steady tightening of these restrictions.Regarding geopolitical risks, Raymond James expects U.S. and NATO defense budgets to rise, regardless of who wins the election. The firm anticipates that global threats will necessitate robust defense spending, whether under a Trump or Harris administration.Lastly, the looming fiscal challenges, including the debt limit and the expiration of the individual provisions of the 2017 tax law, are set to dominate the agenda in 2025.Raymond James projects that, following the passage of a tax package, there is a high likelihood of an increased child tax credit and the reinstatement of the R&D tax credit and bonus depreciation, independent of the electoral results.“We expect the debt limit to be raised, but will be looking for its impact on U.S. Treasuries,” the report concluded. More

According to CME Group’s (NASDAQ:CME) closely-monitored FedWatch Tool, markets are currently pricing in a nearly 95% chance the central bank chooses to slash rates by a quarter-percentage point from its current range of 4.75%-5% after its upcoming two-day gathering.In September, the Fed cut rates by an outsized 50 basis points, largely in an attempt to bolster the labor market during a time of waning inflationary pressures.Since then, data has pointed to fading — albeit lingering — price growth and broad resilience in job demand.An inflation metric closely monitored by the Federal Reserve slowed as expected in the year to September, potentially bolstering the case for the central bank to slash interest rates again this year.The personal consumption expenditures price index decelerated to a 2.1% annual increase during the month, cooling from an upwardly-revised reading of 2.3% in August. The figure was in line with economists’ estimates. On a monthly basis, the index sped up slightly to 0.2% from 0.1% in August, matching projections.Meanwhile, the so-called “core” metric, which strips out more volatile items like food and fuel, came in at 2.7% annually — faster than expectations of 2.6% and equaling August’s pace. Month-on-month, it accelerated slightly to 0.3%, meeting expectations.Commerce Department data also showed core PCE at 2.2% in the third quarter, easing from a prior reading of 2.8% but faster than projections of 2.1%, while headline PCE cooled to 1.8%.On the employment front, the US economy added far fewer jobs than anticipated in an October, although the figures were impacted by devastating recent hurricanes and ongoing labor actions. Nonfarm payrolls rose by 12,000 during the month, falling from a downwardly revised 223,000 in September. Economists had expected a reading of 106,000.Separately on Thursday, weekly claims for first-time unemployment benefits dipped to 216,000 from 228,000 in the prior week.Earlier in the week, private payrolls for October unexpectedly jumped to 233,000, pointing to resilience in the labor market despite a string of potential disruptions from devastating hurricanes and ongoing strikes. The all-important nonfarm payrolls report is due out on Friday.Crucially, these are some of the final economic indicators that will be made available to voters prior to the Nov. 5 US presidential election. Issues like high food and housing costs remain front of mind for many Americans, with many viewing the state of the economy as poor, according to a poll from the Associated Press-NORC Center for Public Affairs Research.The US economy grew at a slower than expected rate in the third quarter despite signs of waning inflationary pressures and solid wage gains, an advance estimate of gross domestic product from the Commerce Department showed on Wednesday. “Since the Committee last met, US economic activity has generally surprised to the upside and suggested ongoing resilience,” analysts at Wells Fargo said in a note to clients. More

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(Reuters) -Intel will be replaced by Nvidia (NASDAQ:NVDA) on the blue-chip Dow Jones Industrial Average index after a 25-year run, underscoring the shift in the chipmaking market and marking another setback for the struggling semiconductor firm.Nvidia will join the index next week along with paint-maker Sherwin-Williams (NYSE:SHW) , which will replace Dow, S&P Dow Jones Indices said on Friday.Once the dominant force in chipmaking, Intel (NASDAQ:INTC) has in recent years ceded its manufacturing edge to rival TSMC and missed out on the generative artificial intelligence boom after missteps including passing on an investment in ChatGPT-owner OpenAI.Intel’s shares have declined 54% this year, making the company the worst performer on the index and leaving it with the lowest stock price on the price-weighted Dow.Shares of Intel fell 1.6% in extended trading on Friday, while those of Nvidia were up 2.2%.This development comes a day after Intel expressed optimism about the future of its PC and server businesses, projecting current-quarter revenue above estimates but warning that it had “a lot of work to do.””Losing the status of Dow Jones inclusion would be another reputational blow for Intel, as it grapples with a painful transformation and loss of confidence,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.”It would also mean that Intel is not included in exchange-traded funds (ETFs) which track the index, which could impact the share price further.”Launched in 1968, the Silicon Valley pioneer sold memory chips before switching to processors that helped launch the personal computer industry.In the 1990s, “Intel Inside” stickers turned commodity electronic components into premium products, and eventually became ubiquitous on laptops.Intel’s revenue was $54 billion in 2023, down nearly one-third from 2021, when Pat Gelsinger took over as CEO. Analysts expect Intel to report its first annual net loss this year since 1986.The company is worth less than $100 billion for the first time in 30 years.That pales in comparison to Nvidia, which is sitting at a $3.32 trillion valuation, making it the world’s second-most valuable company. NVIDIA’S AI LEADNvidia has emerged as a cornerstone of the global semiconductor industry, thanks to the essential role its chips play in powering generative AI technologies which has driven a seven-fold surge in its shares over the past two years.The company’s shares have risen more than two-fold this year alone.Once popular only among gamers who hunted for PCs with Nvidia’s graphics processors, it is now seen as a barometer for the AI market.The company’s 10-for-one stock split that took effect in June also helped pave the way for its addition to the index, making its soaring shares more accessible to retail traders.Intel, on the other hand, has struggled to gain share in the AI chip market dominated by Nvidia, with the front-runner’s chips hard to get and even harder to replace in AI datacenters, owing to the processors’ technological edge and the high costs of replacing them. More

Under the terms of the proposed agreement, Townstone Financial would pay a $105,000 fine into the U.S. Consumer Financial Protection Bureau’s victims relief fund.In a statement on its website, the Pacific Legal Foundation, which represented Townstone, said the company neither admitted nor denied the allegations and settled due to government’s superior legal resources. “This case should never have been brought,” attorney Steve Simpson said.WHY IT MATTERSThe CFPB says the enforcement action follows the agency’s July legal victory before the U.S. Seventh Circuit Court of Appeals, which gave it new freedom to fight racial discrimination not only in lending but also in marketing of loans. It is the agency’s second action on racial bias in the mortgage industry in less than three weeks.KEY QUOTE”The CFPB’s lawsuit against Townstone Financial included a major appellate court victory that makes clear that people are protected from illegal redlining even before they submit their application,” CFPB Director Rohit Chopra said in a statement.CONTEXTIn 2020, the CFPB accused Townstone Financial of discouraging Black people from applying for mortgages and avoiding the credit needs of African American neighborhoods in the Chicago area. In weekly marketing radio shows and podcasts, the company allegedly disparaged predominantly Black neighborhoods as crime ridden and the “jungle.” More

NEW YORK (Reuters) – Global stock indexes climbed on Friday with Amazon.com (NASDAQ:AMZN) shares rallying following the company’s stronger-than-expected results, while 10-year Treasury yields hit a four-month high as investors grew wary of buying bonds before the U.S. presidential election on Tuesday.Treasury yields initially tumbled after U.S. jobs data for October showed the U.S. economy barely added any jobs in October, though the numbers were heavily disrupted by industrial action and hurricanes.The U.S. unemployment rate, however, held steady at 4.1%, offering assurance that the labor market remained on a solid footing.After U.S. stock market closed, S&P Dow Jones Indices said Nvidia (NASDAQ:NVDA) will be added to the Dow Jones Industrial Average, replacing Intel (NASDAQ:INTC). Nvidia’s shares were up 1.9% in after-hours trading while Intel’s were down 1.4%.Polls show Republican Donald Trump and Democratic Vice President Kamala Harris in almost a dead heat with four days to go before U.S. Election Day.Some strategists say the U.S. fiscal trajectory is expected to worsen under a presidency by either Trump or Harris.Benchmark 10-year yields were last up 7.7 basis points at 4.361%, the highest since July 5. It follows a 48 basis point increase in October, which was the largest monthly basis point increase since April.On Wall Street, Amazon.com shares jumped 6.2% after its report late on Thursday. It also indicated that it expected healthy results in the holiday quarter.The share gain helped offset a 1.2% decline in shares of Apple (NASDAQ:AAPL) following the iPhone maker’s modest growth outlook.”We’ve made it most of the way through the Big Tech names, and (results) were probably not as bad as people feared and, in some cases, were pretty good. So investors decided that the little bit of a sell-off we had the last couple of days was unwarranted,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.The Dow rose 288.73 points, or 0.69%, to end at 42,052.19, the S&P 500 rose 23.35 points, or 0.41%, to 5,728.80. The Nasdaq Composite rose 144.77 points, or 0.80%, to 18,239.92.For the week, the S&P 500 was down 1.4%.MSCI’s gauge of stocks across the globe rose 2.85 points, or 0.34%, to 835.15. Europe’s main stock index notched its biggest one-day gain in five weeks, as banks led an overall market rebound after recent declines. The STOXX 600 index ended 1.09% higher.The dollar rose against the euro and rebounded against most major currencies after traders digested the U.S. jobs data. The euro was down 0.40% against the dollar at $1.084. The dollar index, which tracks the greenback against six major currencies, was up 0.36% at 104.24.The dollar was up 0.60% against the yen to 152.94, ahead of a three-day weekend in Japan. Earlier in the week, the yen got a boost from less-dovish comments from Bank of Japan Governor Kazuo Ueda following the central bank’s decision to stand pat.Bitcoin, the world’s largest cryptocurrency by market cap, was up 0.57% on the day at $69,531.Oil extended its recent rally on reports that Iran was preparing a retaliatory strike on Israel from Iraqi territory in the coming days.Iran and Israel have engaged in a series of strikes within the broader Middle East warfare set off by fighting in Gaza. Previous Iranian air attacks on Israel on Oct. 1 and in April were mostly repelled, with only minor damage.Brent futures gained 29 cents to settle at $73.10 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 23 cents to settle at $69.49.Gold prices edged down, pressured by a stronger U.S. dollar. More

Shore is working to merge portfolio companies Southern Veterinary Partners and Mission Veterinary Partners and recapitalize the combined entity with an investment from California-based Silver Lake, according to the report.The two private equity firms would co-own the combined entity and together contribute about $4 billion of fresh equity to the company, the Bloomberg report said.Silver Lake and Shore Capital did not immediately respond to Reuters’ requests for comment. More

NEW YORK (Reuters) – A double dose of potentially market-moving events arrives in the coming week as Americans vote on their next president and the Federal Reserve offers more insight on the path of interest rates at its monetary policy meeting.The Nov. 5 vote culminates an election cycle that has captivated the country and sparked swings in corners of financial markets. Among these has been the waxing and waning of the so-called Trump trade, a bevy of asset price moves reflecting sentiment that Republican Donald Trump is gaining momentum in his race against Democrat Kamala Harris for the U.S. presidency.Those trades have included a rise in the U.S. dollar and a sell-off in Treasuries possibly fueled by strong economic data and a bitcoin surge spurred by hopes that Trump would deregulate the crypto industry.Still, polls remain deadlocked and bets leaning toward Trump were narrowing at the end of the week. Some investors expect volatility to accompany next week’s vote, no matter the result.”In either scenario, it seems like there’s some near-term risk,” said Walter Todd, chief investment officer at Greenwood Capital.Todd said a win by the Republican could be a “sell the news” event that sparks profit-taking in Trump trades. A win by Harris could spark a more serious unwind, he said. Control of Congress will also be determined with Tuesday’s vote, adding another wrinkle for investors as they weigh how various political outcomes could impact assets over the longer term, with the two candidates offering starkly different paths for the U.S. economy.For example, the expectation that Trump would seek to lower regulations stands to benefit banks, while higher tariffs could benefit domestically focused small-cap companies while ramping up the potential for volatility in broader markets.Expectations that Harris would be more supportive of clean energy initiatives means solar and other renewable energy stocks could rise in the event she prevails, analysts said.Investors are also wary of volatility from an election result that is not immediately clear due to the closeness of the race or is contested by one of the parties. In 2020, Trump tried to overturn the results of his loss to President Joe Biden, falsely claiming it was the result of voter fraud in multiple states.”The market did fine under Trump. It can do fine under Harris,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. “We just need clarity.”FED AHEADThursday’s Fed decision on monetary policy looms as another risk for the S&P 500’s rally of some 20% this year, though mixed earnings from several tech giants this week led the index to end October in the red, following five straight months of gains.Fed funds futures trading shows the market expects the U.S. central bank to cut its benchmark policy rate by a modest 25 basis points, LSEG data showed, after easing rates in September for the first time in four years. For many investors, the focus will be on guidance from Fed Chair Jerome Powell, including whether the central bank might consider pausing its rate-cutting cycle at future meetings in light of strong economic data. Citigroup’s economic surprise index, which measures how economic data performs versus expectations, is at its highest level since April. Data this week showed the U.S. economy grew at a solid 2.8% pace in the third quarter. Friday’s monthly employment report, the last key piece of data before the Fed meeting, ran counter to that trend as it showed job growth almost stalled in October. The data, however, was clouded by aerospace industry strikes and hurricanes that impacted the response rate for the payrolls survey. “This week’s data … suggest the reasoning for a cut is still valid,” JPMorgan economist Michael Feroli said in a note. “Even if the election is decided by Thursday, we think there are enough uncertainties in the outlook to warrant a cautious approach to forward guidance” from the Fed. More