Dear valued client,
Markets finished lower this week as October’s inflation figures were reported. The CPI ticked up slightly to 2.6% (compared to 2.4% in September and 2.5% in August), aligning with market expectations. This was the first rise in inflation in seven months, mainly because energy prices didn’t drop as much as they had before. Gasoline and fuel oil prices still fell, but not as sharply, while natural gas costs stayed the same as last month. Housing costs remained steady and were a big reason behind a small 0.2% increase in overall prices from the previous month. With inflation appearing to stay under control, the Federal Reserve may decide to lower interest rates in December.
Climate Summit COP29 which kicked off in Baku, Azerbaijan this week, offers a striking showcase of contradictions and questionable priorities in the global climate change narrative. Canada, once a vocal advocate for climate leadership, has scaled back its visible participation, with Prime Minister Justin Trudeau absent and Environment Minister Steven Guilbeault focusing on symbolic gestures like pledging $1 billion in foreign aid and hosting workshops. Meanwhile, countries with dubious environmental records, such as Russia and oil-dependent Azerbaijan, are taking center stage, with even the Taliban in attendance. Baku, a city synonymous with oil production, highlights the paradox of a climate summit powered almost entirely by fossil fuels. At the same time, the push for rich nations to commit trillions in climate funding to poorer countries raises questions about accountability, effectiveness, and whether such massive redistribution will genuinely address environmental concerns or simply fund political agendas.
The Federal Trade Commission’s (FTC) antitrust case against Meta’s acquisitions of Instagram and WhatsApp is moving to trial, as a judge ruled in favor of proceeding. The FTC argues that Meta’s purchases of Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion were aimed at eliminating competition in the social networking market, rather than improving its own products like Facebook Camera and Messenger. Meta counters that the acquisitions enhanced user experience and that the FTC is overlooking competition from platforms like TikTok, YouTube, LinkedIn, and X. If the FTC wins, Meta could be forced to divest from Instagram and WhatsApp. This lawsuit, initiated under Donald Trump and refiled by FTC Chair Lina Khan in 2021, reflects bipartisan efforts to address Meta’s perceived monopoly power. Looking ahead, while political shifts may bring new leadership to the FTC, ongoing antitrust actions against Big Tech are likely to continue under the Trump administration.
Elon Musk’s platform X faced a turbulent post-election week, with significant user losses but potential gains in advertising. Over 115,000 U.S. users deleted their accounts the day after the election, the highest single-day loss since Musk acquired the company. Many of these users appear to be migrating to Bluesky, a smaller competitor that gained 1 million new users in the same period, reaching 15 million total users. Meanwhile, advertising agencies suggest some brands may be ready to return to X, anticipating political advantages with the incoming Trump administration, where Musk is expected to have influence. This would be crucial for X, as ad revenue from the platform’s top U.S. advertisers plummeted by 68% in the first half of this year compared to the same period in 2022.
Musk’s influence in the new administration will likely resemble the same strategy he employed when he first bought X – cutting the pool of employees by roughly 70% and increasing efficiency. President-elect Donald Trump announced the creation of a new Department of Government Efficiency (DOGE), aimed at reducing government bureaucracy, cutting excessive regulations, trimming wasteful spending, and restructuring federal agencies. Musk and biotech entrepreneur Vivek Ramaswamy, who previously ran for the GOP presidential nomination, will co-lead the department. Musk reportedly proposed this idea to Trump, emphasizing a streamlined approach to government operations.
A second Trump term is expected to bring significant economic changes in North America and beyond. Trump has signaled his intention to impose tariffs of 10-20% on all imports into the U.S., which could cost Canada up to $30 billion annually, harm GDP growth, and potentially increase inflation if Canada retaliates with its own tariffs. For the U.S. economy, these tariffs might boost domestic industries like steel and aluminum but are also likely to slow economic growth and drive up costs for consumers. Trump’s proposed tax cuts across income, corporate, and other taxes would likely benefit businesses and wealthier Americans, though they could also increase the national deficit. Stricter immigration policies could lead to labor shortages, pushing up wages and inflation. Trump’s stance on China includes potential tariffs as high as 100%, which could prompt companies to shift manufacturing to countries like Vietnam or Cambodia to avoid high costs. Additionally, Trump’s support from the crypto industry could reshape regulatory policy; he has promised to remove SEC Chair Gary Gensler, causing Bitcoin to surge to over $75,000, as crypto investors anticipate a friendlier regulatory environment.
“A second chance doesn’t mean you’re in the clear. In many ways, it is the more difficult thing. Because a second chance means that you have to try harder. You must rise to the challenge without the blind optimism of ignorance.” – Ling Ma
Have a terrific weekend,
PW
