Daily Commentary

MarketMinder’s View: This article mentions some specific companies, so we remind readers MarketMinder doesn’t make individual security recommendations. Our focus is on the broader theme only: What do rising job cuts mean for investors? At the top, the article discusses how companies in America and Europe are reducing headcount, and without the latest labor data from the Bureau of Labor Statistics to confirm either way, these anecdotal layoff stories may signal trouble for the broader economy. The bulk of the piece explores why companies may be laying off workers, with reasons ranging from tariff costs to AI investment replacing some entry-level work. So far, the evidence for the latter seems scant: “Businesses loaded with white-collar workers such as those in the information, finance, and professional services sector have seen job growth in tandem with increased AI usage, [economists] wrote.” As for the overall economic effect, remember jobs are late-lagging economic indicators, so whether they are growing or contracting, they aren’t likely to shed much light on where the economy is headed next. Moreover, some high-profile examples aside, “Weekly state jobless figures so far do not show a measurable surge in layoffs, but job growth remains subdued. Payroll provider ADP on Tuesday estimated an increase of 14,250 jobs in the four-week period ended Oct. 11.” The available data are in better shape than the discussions surrounding them—a sign the bull market has more wall of worry to climb.

MarketMinder’s View: The titular deal is “pretty much finalized,” according to President Donald Trump, so here are some of the details. In exchange for the US lowering tariffs on South Korean goods to 15% from 25%, Seoul will now “make $150 billion in [American] shipbuilding investments, with an additional $200 billion earmarked for an investment pledge designed to look like a similar agreement with Japan, South Korea Policy Chief Kim Yong-beom said Wednesday. That suggests South Korea can use not only equity but loans and loan guarantees to fund the investment package, a key concession.” That helps clear some uncertainty, particularly for Korean automakers since US duties on car imports “had remained at 25% while the talks continued. That left the nation’s automakers at a competitive disadvantage against their Japanese rivals since Tokyo finalized its deal in September. Those duties will now come down to 15%, according to Kim.” A couple of things for investors to note here. First, the “deal” is technically a memorandum of understanding, which isn’t legally enforceable, so a bit of uncertainty lingers. Second, it is also unclear what the agreement’s status will be if the US Supreme Court strikes down tariffs. With oral arguments before the Supreme Court starting November 5, this might all be moot—or subject to renegotiation—in a few weeks. Not that that would necessarily shock stocks, which are well aware of the proceedings.

MarketMinder’s View: So what exactly is in Japan’s investment deal with the US (done in exchange for lower tariff rates)? More details have emerged (and again, please keep in mind MarketMinder doesn’t make individual security recommendations; specific companies referenced are for illustrative purposes only): “A total of 21 projects are listed in the joint fact sheet, spanning sectors such as critical energy infrastructure, AI infrastructure and critical minerals. The energy sector had the most projects with eight, indicating strong U.S. interest. Of 21 projects, 16 include specific value listings, amounting to a total of $393.45 billion. ... Bodies such as the Japan Bank for International Cooperation will also provide funding, loans and loan guarantees to projects chosen by U.S. President Donald Trump. The investments will be made by January 2029, when Trump’s term of office expires.” Now, planned investment isn’t set in stone, and risks remain all this could yet evaporate. But that is nothing new for markets, which have been assessing the likelihood of such projects’ undertaking since the initial agreement in late July. Now with the “fact sheet” released, uncertainty continues to fall.