Trump Makes Some Very Big Bets on Private Companies

By Yuval Rosenberg and Michael Rainey

Happy Tuesday! President Trump today delivered what may be the two least controversial pardons of his second term, granting clemency to a pair of turkeys named Gobble and Waddle. Trump used the lighthearted event to take some familiar political jabs. He claimed that President Joe Biden's turkey pardons last year were not valid because they were done with an autopen, and that he considered naming this year's birds after Chuck Schumer and Nancy Pelosi but then he would not have pardoned them.

Have a happy Thanksgiving! We'll be back in your inbox next week.

Consumer Confidence Tumbles as Economic Outlook Darkens

U.S. consumers are showing signs of stress as we head into the end-of-the-year holiday season, according to economic data released today.

The Conference Board said Tuesday its consumer confidence index dropped 6.8 points from October to November, registering 88.7, the lowest reading since April, when President Trump unveiled a comprehensive tariff plan that sent stock markets reeling.

Dana M. Peterson, the Conference Board's chief economist, noted that U.S. consumers have become more pessimistic about economic conditions six months from now. The Conference Board's expectations index dropped 8.6 points to 63.2, marking the tenth straight month below 80, a measure historically associated with recession. The outlook for the labor market remains "decidedly negative," Peterson said, while expectations for income gains have shrunk dramatically.

An index measuring current economic conditions also fell, sliding 4.3 points to 126.9.

When asked what factors influenced their views, survey respondents cited prices and inflation, tariffs and trade, and politics, with some mentioning the federal government shutdown.

The Conference Board's numbers are consistent with other measures of consumer attitudes. The University of Michigan's index of consumer sentiment dropped nearly 5% in November and is down 29% from a year ago. Michigan's measure of consumer expectations is down 34% from a year ago, while its index of current conditions is down 20%.

Retail sales sluggish: A separate report from the Commerce Department that had been delayed by the government shutdown showed that retail sales grew 0.2% in September on a monthly basis. The results show a drop from the growth recorded during the summer, when retail sales grew 1% in June and 0.6% in July and August.

Adjusting for inflation, retail sales actually fell in September. EY Chief Economist Gregory Daco noted that inflation has eaten up a big chunk of nominal growth. "While US #retail sales are up 16.1% since January 2022, inflation-adjusted retail sales are up... 1.1%," Daco wrote Tuesday.

Rate cut odds jump: The downbeat economic news boosted hopes on Wall Street that the Federal Reserve will cut interest rates at its final meeting of the year next month. The odds of a rate cut jumped to 84% Tuesday, according to the CME FedWatch tool, which measures investor sentiment.

Last week, the odds of a rate hike in December dropped below 50%. "I've never seen that kind of volatility and expectations for a Fed cut in the span of a few days," Ron Albahary, LNW's chief investment officer, told CNBC. "The market is hyper-focused on this issue. I can't predict the future, but it seems like the narrative is trending towards a Fed rate cut [on] Dec. 10, supportive of a Santa Claus rally."

Trump Admin Has Spent More Than $10 Billion to Buy Stakes in Companies

The Trump administration has committed more than $10 billion in federal money to buying ownership stakes in private companies it sees as essential to national security, Ana Swanson of The New York Times reports.

"The government's growing portfolio of corporate ownership involves minority stakes, or the option to take them in the future, in at least nine companies involved in steel, minerals, nuclear energy and semiconductors," Swanson writes, adding that most of the deals were struck in October and November. "The effort appears mostly driven by national security concerns, particularly a desire for the government to prop up strategic industries and lessen America's reliance on foreign countries like China for key resources."

An $8.9 billion investment to buy a 9.9% stake in struggling semiconductor giant Intel attracted significant attention, but other, smaller deals - largely focused on rare earth minerals - haven't gotten as much coverage, even as they have raised some concerns about the government taking an active and potentially distorting role in private industry, including the possibility of favoritism. Questions have also been raised about whether Trump and his administration have an overarching strategy guiding their dealmaking and whether they are putting taxpayer money at significant risk.

"Some officials are hopeful the equity stakes will generate a windfall for taxpayers, but the likelihood of that is unclear," Swanson notes. "Many of the companies are facing financial headwinds, and some could take years to become profitable."

Kush Desai, a White House spokesman, defended the administration's unusually aggressive entry into corporate deals. "If business-as-usual policies worked, America would not be reliant on foreign countries for critical minerals, semiconductors and other products that are key for our national and economic security," he said in a statement to the Times. "The administration's targeted equity stakes ensure that taxpayers get a good bargain and that the ball meaningfully moves forward to encourage further investment by the private sector."

Read more at The New York Times.

Number of the Day: $5,164,739.75

West Virginia Republican Sen. Jim Justice and his wife, Cathy, agreed to pay more than $5.1 million in unpaid income taxes, penalties and interest dating back to 2009 after the Justice Department brought a lawsuit seeking to collect the funds owed as of August 4.

Justice, 74, served two terms as West Virginia's governor before being elected last November to the Senate seat formerly held by Democratic Sen. Joe Manchin.

Forbes reported earlier this year that Justice at one point had a net worth estimated to be as high as $1.9 billion, "the richest man in the Mountain State, thanks to a lifetime amassing a fortune in coal and real estate." But by the time he was sworn in to the Senate, his net worth had fallen to "less than zero," Forbes said, thanks to massive liabilities totaling more than $1 billion "in the form of personally guaranteed bank loans, debt, court judgments and environmental liabilities."

Justice last month told reporters that the IRS's legal moves against him were "more of a political move but at the same time it's just a situation that big companies deal with all the time." He said he was owed more in refunds than he owes in unpaid taxes. "All I can say to you is just simply just this: when all this is said and done, I will promise you to God above that what will happen is we will - Jim will - end up with significantly more dollars from the IRS than what we owe the IRS," Justice said then.

Justice reportedly continues to commute to the Senate almost every day by private jet from Lewisburg, West Virginia, to Washington, D.C.

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