Trump win has economists concerned US economy will fail to make soft landing
Investors this year have grown increasingly confident the US economy will achieve a “soft landing.”
But the election of Donald Trump as the nation’s next president has complicated the outlook.
And some economists now think it’s likely the US could face another inflation resurgence if Trump follows through with his key campaign promises.
“We are in the soft landing,” Nobel prize-winning economist and Columbia University professor Joseph Stiglitz said at Yahoo Finance’s annual Invest conference on Tuesday. “But that ends Jan. 20.”
Trump and his proposed policies have been viewed as potentially more inflationary due to the president-elect’s campaign promises of high tariffs on imported goods, tax cuts for corporations, and curbs on immigration. Those policies could also pressure an already bloated federal deficit, further complicating the Federal Reserve’s path forward for interest rates.
“The biggest risk is a large across-the-board tariff, which would likely hit growth hard,” Jan Hatzius, chief economist at Goldman Sachs, wrote in a note to clients on Thursday.
Jennifer McKeown, chief global economist at Capital Economics, also acknowledged in a note this week there are “upside risks” to inflation “stemming partly from Trump’s proposed tariff and immigration policies.”
And investors have taken notice.
On Wednesday, the latest Global Fund Manager Survey from Bank of America highlighted increased expectations of a “no landing” scenario, in which the economy continues to grow but inflation pressures persist, leading to a higher-for-longer interest rate policy from the central bank.
Tariffs have been one of the most talked-about promises of Trump’s campaign. The president-elect has pledged to impose blanket tariffs of at least 10% on all trading partners, including a 60% tariff on Chinese imports.
“It will be inflationary,” Stiglitz said. “And then you start thinking of the inflationary spiral. The prices go up. Workers will want more wages. And then you start thinking of what happens if others retaliate [with their own duties.]”
Minneapolis Fed president Neel Kashkari categorized a possible retaliation as a “tit-for-tat” trade war, which would keep inflation elevated over the long term.
“If inflation goes up, [Federal Reserve Chair Jerome Powell] is going to raise interest rates,” Stiglitz said.
“You combine the higher interest rates and the retaliation from other countries, you’re going to get a global slowdown. Then you have the worst of all possible worlds: inflation and stagnation, or slow growth.”
Is Palantir Stock Still a Buy? Wall Street Is Telegraphing a Clear Answer.
The growing utility of artificial intelligence (AI) promises to have a profound impact on our lives. While the technology is still in its infancy, generative AI is improving by leaps and bounds, with new use cases littering the landscape.
One of 2024’s biggest beneficiaries is Palantir Technologies (NYSE: PLTR). The stock is up more than 240% so far this year and up 820% since AI captured the spotlight in early 2023. Gains of that magnitude have also sent the stock’s valuation soaring, making some investors understandably skittish.
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Let’s take a look at the driving force behind Palantir’s ascent, what Wall Street has to say about the matter, and whether the stock is a buy right now.
Palantir rose from the ashes of the 9/11 terrorist attack on the premise that siloed intelligence data contained a number of clues that could have prevented the tragedy. Founder Peter Thiel envisioned a system that could pull data from a variety of sources and apply sophisticated algorithms to connect seemingly disparate pieces of information to identify would-be terrorists before they could act. Palantir was the fruit of that vision and became the go-to for U.S. intelligence agencies and our allies.
The company has since expanded beyond its original defense offerings, applying the AI knowledge it developed to serve enterprise companies, using its data mining and business analytics expertise to provide customers with actionable intelligence.
The game-changer came early last year when Palantir introduced its Artificial Intelligence Platform (AIP), which harnesses generative AI to make its systems even more useful to enterprises. By tapping into existing data, AIP can address company-specific issues, providing solutions that might otherwise be missed.
For example, in a demo video, Palantir illustrates how AIP can leverage company data to minimize production disruptions in the face of an oncoming hurricane. The system scrutinizes remaining orders and recommends which ones to accelerate, delay, or cancel. It also suggests which ones should be handed off to other fulfillment centers and how pursuing alternate delivery options will impact backlogs and profits.
In another masterstroke, Palantir took much of the guesswork out of implementing AI solutions by hosting boot camp sessions. “These immersive, hands-on sessions allow new and existing customers to build live alongside Palantir engineers, all working toward the common goal of deploying AI in operations,” Palantir wrote. The ability to address real-world business problems has fueled robust demand for these boot camps, resulting in accelerating the conversion of AIP deals.
2 Magnificent Stocks That I'm "Never" Selling
It’s very difficult to make money by conducting short-term trading. A multitude of difficult, if not impossible, factors to predict influence short-term stock prices.
However, buying strong businesses with solid long-term fundamentals should produce outsize long-term gains. It’s not easy since companies must adapt to changing environments, but these two stocks merit an investment for those with long-term views.
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Here’s a look at the two companies. While holding them “forever” may not prove practical, I feel confident that patient investors will be rewarded.
Costco (NASDAQ: COST) offers members value for an eye-popping array of merchandise and services via its warehouses and online. Often, its offerings are sold to shoppers in bulk.
Management continues to execute the company’s simple business very well. You can see this by looking at retention, which consistently hovers around 90%, and member growth. In the latest fiscal year, which ended on Sept. 1, Costco had a 90.5% worldwide renewal rate, and paid membership increased 7.3% year over year to 76.2 million.
The company implemented modest membership fee increases in the U.S. and Canada that went into effect at the start of September. Certain types of memberships went from $60 to $65, and Executive memberships increased by $10 to $130 a year. Since this was the first time it had raised fees in seven years, it seems unlikely members will push back, particularly given the value they receive.
Costco remains highly profitable. In the latest year, its operating income grew 14.4% to $9.3 billion.
The shares have richly rewarded investors over the years. In the last decade through Nov. 1, the stock has gained more than 560%, trouncing the S&P 500‘s 192%. The consistent profitability growth has resulted in a richer valuation than the overall market. Costco’s shares recently sold at a price-to-earnings (P/E) ratio of 56 compared to the S&P 500’s 31.
Since you plan on holding the shares for a long time, you could employ dollar-cost averaging, investing the same sum at regular intervals to smooth out your average purchase price.
Home Depot (NYSE: HD), the largest home-improvement retail chain with more than $150 billion in annual sales, remains an attractive destination for offers to homeowners and professional contractors. It offers convenience and a wide range of products and services.
Sales have been weak lately. Same-store sales (comps) have been negative, including -1.3% in the fiscal third quarter (ended Oct. 27). But that’s due to economic factors that have caused home sales to slip and homeowners to hold off on major projects. These factors include high interest rates that have raised borrowing costs. Existing home sales dropped 1% in September, and mortgage rates have been on the rise, with the 30-year fixed-rate mortgage reaching about 6.8% recently.
Why the Affordable Care Act is in real trouble this time
In the leadup to this month’s election, House Speaker Mike Johnson promised that Republicans would make “massive” changes to the Affordable Care Act if they won a government sweep.
With a trifecta now in hand, the party will soon have its chance to make good on that vow.
So far, GOP leaders have been vague about what exactly they might do. During his debate with Vice President Kamala Harris, President-elect Donald Trump notoriously said he had only “concepts of a plan” for how to deal with the health care law, which his party failed to repeal and replace after a grueling, months-long effort during his first term in office.
But there’s at least one key reason to think that this time will turn out differently: A major expansion of the Affordable Care Act’s insurance subsidies passed by the Biden administration is currently set to expire after 2025, which will lead to large premium and deductible increases for many Americans who get their health coverage through the program’s exchanges.
That means Republicans could pare back Obamacare without lifting a finger. But the looming subsidy cliff might also give the party political cover to make broader changes that would otherwise be difficult for more moderate lawmakers to swallow.
Democrats temporarily made Obamacare’s insurance tax credits more generous as part of President Joe Biden’s $1.9 trillion American Rescue Plan. Those changes to the law’s subsidies, which lower the cost of health coverage purchased on federal marketplaces, knocked premiums to zero for many lower-income families while further limiting their out-of-pocket expense. They also for the first time capped the price of insurance for Americans who earn more than 400% of the federal poverty line, equal to $124,800 for a family of four today.
Since then, enrollment on the exchanges has jumped about 80%, from 11.9 million in 2021 to 21.4 million in 2024. Much of that growth came from poorer and moderate-income households, some of whom had previously fallen into the law’s coverage gap because they earned too little to qualify for marketplace subsidies but lived in states that declined to expand Medicaid.
Democrats extended the changes through next year as part of the Inflation Reduction Act, but chose not to make them permanent in order to limit that legislation’s cost. Instead, lawmakers hoped that the beefed up subsidies could be renewed as part of the bigger negotiation over the tax code that’s looming next year, when parts of the 2017 Tax Cuts and Jobs Act are also set to expire.
With Republicans in full control of the White House and Capitol Hill, however, a renewal seems unlikely.
This Artificial Intelligence (AI) Stock Soared Since Trump Won the Election, but Is It a Buy?
In the days following Donald Trump’s return to the White House, the stock market has set record highs. While Trump has promised to cut taxes and boost business, he’s also expressed his desire to regulate certain big tech players, and his tariff-based trade policy could affect the artificial intelligence (AI) companies that rely on foreign-made components.
We’ll have a better picture of his economic policy in the coming months. For now, investors appear to believe his administration will ultimately be a friend to the AI market. Palantir (NYSE: PLTR), in particular, saw its stock pop dramatically after Election Day, which was the day after Palantir issued its quarterly earnings.
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How much of this is from positive earnings and how much is from the election? I would pin the lion’s share on its earnings. Palantir’s stock was up 23% by market close on Nov. 5, well before we knew who won. That said, the firm certainly could benefit from a Trump presidency, and since the election, the stock is up another 16% as of this writing, so it seems both are at play.
So, with so much momentum behind it, is now the time to buy?
If you’re unfamiliar, the company gets its name from The Lord of The Rings. Palantirs are magical objects that allow their user to see everything happening in real time across huge swaths of land. That is, more or less, what the company does, providing AI-powered intelligence platforms that help companies and government agencies gather information and analyze it.
Though it has been using AI and machine learning for years, recent advancements supercharged its product capabilities, and its sales accelerated.
Palanir’s Q3 numbers were impressive, beating Wall Street’s revenue and earnings per share (EPS) estimates by 3.1% and 10.1%, respectively. It brought in $725 million in revenue for the quarter, up nearly 30% from a year ago, while its EPS rose nearly 43%. Those are impressive numbers. Perhaps more impressive is that the company has delivered that kind of revenue growth for three years now while its operating expenses have stayed relatively flat. Check out this chart showing the two lines diverge.
Palantir’s business appears to be incredibly scalable and, if the trend continues, extremely profitable.
Despite the company’s success dealing with the government, the revenue growth this quarter was especially driven by a swelling in its U.S. commercial segment client list. As CEO Alex Karp put it, there is a “U.S.-driven AI revolution that has taken full hold.” The company’s domestic client count rose 77% from a year ago, helping fuel the 54% growth in revenue for the segment. The company expects the trend to continue, setting a year-end target of 50% growth.
This Week In Appleverse: $3.8B Lawsuit, EU Directives, And Upcoming Products
It was a rollercoaster week for Apple Inc. AAPL. From facing a hefty legal claim in the UK to receiving directives from the EU, the tech giant had its hands full. Amidst these challenges, Apple also revealed exciting plans for new tech products set to challenge industry competitors. Here’s a quick recap of the major stories that unfolded over the weekend.
Apple Faces $3.8B Legal Claim Over iCloud
Consumer group Which? has lodged a £3 billion ($3.81 billion) legal claim against Apple, alleging the company breached UK competition law with its iCloud service. The claim suggests that Apple has exploited its market dominance by directing customers towards its integrated iCloud service without presenting alternative cloud storage options. The case could result in compensation for approximately 40 million UK iPhone and iPad users.
EU Orders Apple to End Geo-Blocking Practices
The European Union has instructed Apple to cease geo-blocking on its media services. The European Commission identified several geo-blocking practices on Apple’s platforms, including the App Store, Apple Arcade, Music, iTunes Store, Books, and Podcasts. The Commission warned of potential enforcement actions by national regulators if Apple fails to address these issues.
See Also: Amazon Set To Introduce New AI Chips In December To Rival Jensen Huang’s AI Stalwart
Apple’s New AI Wall Tablet Set to Challenge Amazon and Google
Apple reportedly plans to unveil a new AI wall tablet, codenamed J490, to compete with Amazon.com Inc. AMZN and Alphabet Inc. GOOG GOOGL Google in the smart home race. The device, expected to be announced as early as March, will serve as a home command center.
Apple’s Smart Camera Coming in 2026
Apple is reportedly planning to enter the smart home IP camera market in 2026, aiming for “tens of millions” of annual shipments, according to analyst Ming-Chi Kuo. The device will integrate with Apple products, with a goal of more than 10 million annual shipments.
Apple’s iOS 18.1 Update Adds ‘Inactivity Reboot’
Apple has introduced an automatic reboot feature for idle iPhones in its latest iOS 18.1 update to enhance device security. The new feature triggers an automatic reboot of an iPhone that has been idle for a certain period.
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Photo courtesy: Unsplash
This story was generated using Benzinga Neuro and edited by Rounak Jain
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XRP Sees Record Futures Bets Amid Price Surge Above $1.20
Regulatory clarity and upcoming technical changes are spurring growth in XRP-tracked futures, with open interest zooming to record highs on Saturday as prices spiked more than 20% over 24 hours.
XRP and U.S. dollar-denominated open interest are at record levels as of Sunday, with over 2 billion tokens (worth nearly $2 billion at current prices) in futures positions betting on further market volatility.
Long/short data shows that traders are slightly biased toward shorts, with 51% in bets against further price increases. (While the ratio should theoretically remain 50:50 at all times as there is always a short trade for each long trade, the bias gives an insight into how savvy traders are positioning over a very short-term period, such as 24 hours.)
Open Interest (OI) refers to the total number of outstanding derivative contracts not settled for an asset.
An increase in both OI and prices typically indicates that new money is entering the market — indicative of a bullish trend. On the other hand, if the price rises but OI falls, the rally might be driven by short covering rather than new buying, potentially signaling a weaker trend.
XRP prices zoomed above $1.20 in U.S. morning hours Saturday, taking weekly gains to over 87%, which set a three-year price high for the token.
Gains in XRP started late Thursday as 18 U.S. states filed to sue the SEC and commissioners, including chairman Gary Gensler, accusing them of unconstitutional overreach of the crypto industry.
The speculative optimism among traders is that a crypto-friendly Trump administration could benefit tokens linked to U.S.-based companies, such as Ripple Labs (related to XRP) and Uniswap (UNI), as the firms are more involved in boosting value for token holders as the regulatory headwinds appear to have cleared.
In addition, a key fundamental development that may boost future gains in XRP is the upcoming RLUSD stablecoin by Ripple Labs, a company closely related to the issuance of XRP.
Ripple plans to use RLUSD in its cross-border payments product, providing liquidity, facilitating faster and cheaper transactions, and potentially integrating with various decentralized finance (DeFi) protocols across multiple blockchains, as previously reported.
XRP has beaten a flat bitcoin (BTC) and a 2.7% gain in the broader crypto market tracked by the liquid CoinDesk 20 index (CD20) over the past 24 hours.
3 Growth Stocks Down 84%, 28%, and 97% to Buy Right Now
While the broad market may be uncomfortably near record highs right now, this isn’t the case for every stock. Some tickers not only didn’t get swept higher by the recent marketwide rally, but they are trading down from their peak prices. Fortunately, it’s likely for reasons that won’t last.
Here are three discounted growth stocks you might want to consider buying while they’re still trading at sale prices. Their long-term bullish cases are still well intact.
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If you’ve been keeping tabs on Roku (NASDAQ: ROKU) of late then you likely know a budding rebound was upended at the end of last month. Although its third-quarter sales and its earnings before interest, taxes, depreciation, and amortization (EBITDA) were both up year over year and its top and bottom lines each topped expectations, guidance for the quarter now underway was disappointing. The company forecasted revenue of $465 million versus the analysts’ consensus forecast of $477 million, while Roku’s projected Q3 EBITDA of $30 million is short of analysts’ expectation of $36.2 million. The immediate post-earnings sell-off now leaves Roku shares 28% below their late-2023 high, and down 84% from their 2021 peak price.
However, the market is missing a couple of key things about this company’s business.
First, Roku is in the habit of topping estimates regardless of its guidance. In fact, not counting the unpredictable years of 2022 and 2023 — when the company was also logging regular losses by investing heavily in its future growth — Roku has reliably beat analysts’ consensus earnings estimates.
And the second (and much bigger) point many investors are underappreciating? The reach of Roku’s streaming ecosystem.
As of Pixalate’s most recent look, Roku accounts for 37% of North America’s connected television market. The next nearest noteworthy rival is Amazon‘s FireTV platform, but at only 15% market share it enjoys less than half of Roku’s domestic reach. Roku’s also doing very well in overseas markets like Latin America, where it’s made a concerted effort to establish itself.
Being the brand name behind the continent’s most popular streaming platform is only half the bullish argument though. Roku is also part of the streaming content landscape. Numbers from TV-ratings service Nielsen say The Roku Channel is more watched within the U.S. than Warner Bros. Discovery‘s HBO Max or Paramount‘s Paramount+. That’s not insignificant for Roku’s home-grown ad-supported streaming service.