Daily Commentary

MarketMinder’s View: This analysis dives deeply into politics, and as always, MarketMinder is nonpartisan and politically agnostic. Our analysis focuses on politics’ economic and market implications only. In this case, infighting among the Labour party is putting some of Chancellor Rachel Reeves’s controversial Budget measures in jeopardy. “Before news broke of an abortive leadership challenge, the chancellor had been carefully laying the groundwork for a tough statement, likely to include busting Labour’s manifesto pledges by raising income tax.” As the article explains, Prime Minister Keir Starmer and Reeves have sought to reassure investors that the government is serious about reining in public spending—which supposedly will require tax hikes and spending cuts. But not all Labour Members of Parliament are on board with proposed measures, and now, some market observers are wondering if backbench rebellions could mean watered-down proposals—or even a leadership change at the top (which would stoke more uncertainty). Now, we caution investors against reading much into daily market movements—stocks (and bonds) can move for any or no reason over short stretches of time. And, as Reeves herself said, the UK’s interest costs amount to 10% of total tax take. She cast that as a reason justifying tax hikes, but this isn’t a high ratio by global standards. There is no inherent economic need for austerity. Rather, we share this discussion because it shows just how political the UK Budget is—and when it comes to politics, what makes “economic sense” isn’t always the primary consideration. This is also another reason why investors should refrain from making any moves based on potential policy changes—widely discussed ideas may end up watered down or removed entirely for political reasons. For more, see yesterday’s commentary, “Deep Dive: How His Majesty’s Treasury Is Setting Budget Expectations.”

MarketMinder’s View: Since this article mentions some specific companies, please note MarketMinder doesn’t make individual security recommendations—firms mentioned here are coincident to a broader theme we wish to highlight. As the title implies, some are preparing for a blue holiday spending season based on recent hiring trends. “Retailers will slash seasonal hiring to levels not seen since after the Great Recession, according to the National Retail Federation, which projects companies will add 265,000 to 365,000 positions. That would be as much as a 40 percent drop from the 442,000 roles they added in 2024, the NRF noted, a reflection of how companies are attempting to offset tariff costs and tighten their budgets. The staffing firm Challenger, Gray & Christmas also expects holiday hiring to be the weakest since 2009, ‘with only a handful of companies making public commitments to holiday staffing’ according to September’s report.” Several factors appear to be weighing on companies’ willingness to hire, including economic uncertainty due to tariffs, AI adoption for productivity purposes and a preference for hiring permanent staff over seasonal hires. All valid reasons, but that doesn’t mean anything here tells you the direction companies and the economy at large are headed. The decision to hire or lay off is a late-lagging indicator, confirming past business decisions. Today’s slower hiring (emphasis on hiring, not layoffs) suggests businesses are making do with what they have in order to remain profitable—it doesn’t mean weakness looms around the corner. We suspect it is likely more reflective of the uncertainty seen in the spring and summer than anything forward looking. That many think otherwise says more about sentiment than reality right now. For more, see this week’s commentary, “Why Mounting Layoffs Don’t Spell Doom.”

MarketMinder’s View: MarketMinder isn’t for or against most policy ideas—our interest is more with a policy’s potential economic or market effect. One trial balloon floated by the White House last weekend was a 50-year mortgage to address housing affordability. The rationale: extending a traditional 30-year mortgage to a 50-year term could lower monthly payments a little bit, theoretically meaning more borrowers could qualify to buy a home. But as this article details, theory often doesn’t align with reality. “A 50-year fixed loan is likely to come with a higher mortgage rate than a 30-year loan, according to the Mortgage Bankers Association, an industry trade group. That’s in part because investors would be taking on more prepayment risk – that is, most borrowers won’t actually pay a 50-year mortgage for the entire loan term.” As another industry expert points out, the upshot is that there isn’t going to be much difference in the monthly payment between a 50-year and 30-year mortgage. Also, don’t overlook the law of unintended consequences. “The math of a 50-year mortgage is already more in favor of the bank than the borrower. To make matters worse, some experts worry that expanding the repayment term to 50 years could permit borrowers to buy more expensive homes, which could drive up home prices.” To put it simply, the answer to the housing affordability crisis is more supply—not minor tweaks that could actually enhance demand. Now, 50-year mortgages aren’t likely to become commonplace if they come about at all, but it is good practice to think through the details whenever headlines start harping on the latest policy ideas. For more, see yesterday’s commentary, “For Investors, Public Political Brainstorming Is Noise, Not News.”