What mattered this week: Stocks slide, tariffs teeter, Dems rise, Musk soar$
Will becoming a trillionaire satisfy Elon Musk?
THE TOP 5:
Stocks slump, don’t worry. The stock market rally of the last seven months took a breather. The S&P 500 fell 1.6% for the week. The tech-laden NASDAQ dropped a heftier 3%. Headlines pointed out it was the worst weekly performance since stocks plunged in April, followed President Trump’s disastrous tariff rollout.
The worries are familiar. The artificial-intelligence boom might be an unsustainable bubble. There were signs of weakness in the economy that could hurt corporate earnings at some point. One prominent short seller, Michael Burry, is betting that Nvidia and Palantir shares will plunge. Palantir CEO Alex Karp said Burry is “batshit crazy,” but $PLTR shares were down 11.2% for the week, anyway.
There’s no sign, however, that this one-week selloff is the start of a bear market. Goldman Sachs CEO David Solomon said there could be a 10% to 20% drawdown in stocks during the next year or two, which got investors’ attention. But that’s almost a tautology, given that a 10% correction occurs about once every two years, on average. A 20% bear-market decline happens about once every seven years.
The last bear market started in January 2022 and ended nine months later. Since then, the S&P has soared by 87%. There was almost a bear market earlier this year. From the low point in April, stocks are up 34%. If a bull-market selloff makes you nervous, zooming out and looking at longer-term gains can help you feel better.
Democrats won a few elections. The one commentators will natter on about endlessly is the New York City mayor’s race, where Democratic Socialist Zorhan Mamdani beat the has-been Andrew Cuomo to become NYC’s first Muslim mayor. At 34, Mamdani is also the city’s youngest mayor in more than 100 years. And he’s the first with a beard since 1913.
But that’s not what all the chatter is about. Mamdani is a strident leftist who wants to hike taxes on the wealthy to pay for free buses and no-cost childcare. He wants to open city-run grocery stores selling staples at wholesale prices. President Trump and other critics call him a “communist,” and they hope Mamdani is so radical he makes all Democrats look wacky. Democrats worry about that, too.
But Democrats have an antidote, which is more moderate candidates such as the two women who just won key governors’ races—Mikie Sherrill in New Jersey and Abigail Spanberger in Virginia. Both are pragmatists who won by focusing on living costs and pocketbook issues. “The moderate playbook wins,” center-left think tank Third Way declared in an election post-mortem. “It’s the model for victory in 2026 and 2028.”
Democrats have been trying to figure out what they stand for, other than everything Trump does is bad. There seems to be an answer, if they’ll hear it.
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End the shutdown, you idiots! The government shutdown that began on October 1 got serious when it disrupted food aid, starting November 1. Now it’s causing snarled skies across the country as unpaid air-traffic controllers stay home. Democrats feel emboldened to keep it going, because they think their strong off-year election showing reflects deep voter support for the party’s priorities. That’s a tragic misread of public attitudes. Sensible Americans hold both parties in contempt and they want the shutdown to end.
It may happen soon. “We believe the government is on track to open next week,” Henrietta Treyz of Veda Partners wrote to clients on November 7. Republicans may end up agreeing to an extension of health insurance subsides Democrats have been demanding. Trump would have to sign off, which he may, because he thinks the shutdown is a loser for Republicans. But never overestimate Congress’s ability to get the job done. Some analysts think the airplane cancellations and voter hate mail will pile up until Thanksgiving approaches.
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Boo, tariffs. The Supreme Court expressed skepticism about the “emergency” tariffs that account for about 75% of the new import taxes Trump has imposed since taking office in January. “We think it is likely that the Supreme Court will rule against the Trump administration,” Raymond James advised its clients. Two courts have already deemed the emergency tariffs illegal. So it wouldn’t be controversial if the Supremes agree.
Trump says it will be “devastating” if the court kills his emergency tariffs. That’s odd, because economists almost universally think growth will be a little stronger, and inflation a little lower, without the tariffs. What a court knockdown would do is deprive Trump of the ability to slap tariffs on any imported product for any reason, and micromanage trade to his liking. A decision could come by late this year or early 2026. Without the emergency justification, Trump can still impose tariffs, but on a more limited basis.
The $1 trillion-dollar man. Tesla agreed to grant CEO Elon Musk a series of payoffs that could put $1 trillion into his pocket if the electric automaker hits some aggressive benchmarks during the next several years. The headlines point out that the deal would make Musk the world’s first trillionaire, assuming there aren’t some oil sheikhs or Putin-level plunderers who have already reached that stratosphere, without publicizing it.
Nobody is really asking why this is so important to Musk. He has threatened to ditch Tesla for his AI company or something shinier if the board doesn’t pony up. The quest for $1 trillion seems rather mercenary for a visionary once motivated by passion. On the other hand, maybe this deal will keep Musk from making another wrong-turn into extremist politics. It’s a weird deal at an increasingly weird company.
WHAT WILL MATTER NEXT WEEK:
Senate schedule. Veda’s Treyz says the Senate schedule will give an important clue as to whether there’s a serious chance of ending the shutdown. The Senate is supposed to be on recess through November 17, but Majority Leader John Thune has kept everybody in town for the weekend. If he fully cancels the recess, that will suggest a breakthrough could be coming. If the Senate does go on recess, there might not be any progress until after November 17.
Inflation delay. The monthly inflation report scheduled for November 13 won’t come out because of the shutdown. The Trump administration published the October report (late) because the numbers helped set the annual cost-of-living adjustment for Social Security recipients. There’s no such pressing need for the data this month. We’ll also miss the monthly job-openings report and several other releases.
Football blackout, Week 2. YouTube TV subscribers will miss the Monday night ESPN broadcast of the Eagles-Packers game, assuming the dispute between YouTube and Disney continues. Disney channels, including ESPN and ABC, have gone dark on YouTube TV since the spat began October 30. Analysts say it could last a while. Monday looks like a good game. Each team leads its division and the odds favor Green Bay by just a single point. If you need something else to watch that night, AMC is airing Forest Gump.