Daily Commentary

MarketMinder’s View: America’s manufacturing soft patch continued in November according to the Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI), which fell to 48.2 from October’s 48.7. Readings below 50 mean more businesses reported contraction last month, though PMIs reflect that contraction’s breadth, not magnitude. The article links November’s weakness to President Donald Trump’s tariffs, which is likely a contributing factor. As it notes, “Uncertainty concerning tariff levels has also weighed on manufacturers, as duty levels have fluctuated for much of the year. Further clouding the outlook: a pending Supreme Court decision that could nullify many of the duties.” While the article’s takeaways are pretty dour, it does offer an interesting point near the conclusion: “A separate survey of manufacturing activity, S&P Global’s PMI for manufacturing, came in at 52.2, down slightly from October’s 52.5, but still above the 50 break-even line, according to its report published Monday. While factories produced more, there was a steep rise in unsold inventories. Demand growth slowed, especially in export markets where tariffs continued to cloud the outlook.” We pointed out this divergence before—worth keeping an eye on, even if this information doesn’t reveal anything markets aren’t already aware of.

MarketMinder’s View: The US and UK struck a deal to remove President Donald Trump’s tariffs on British pharmaceutical imports. Most pharmaceuticals have been largely levy-free since the World Trade Organization’s 1994 public health agreement, but the Trump administration changed that, with the president’s threats of 100% tariffs on medicines made outside America. For the UK, Monday’s deal removes this burden and uncertainty. This probably isn’t a game-changer economically, considering UK pharmaceuticals comprise around 11% of exports to the US (per the Office for National Statistics). Still, the deal is a positive in that it provides clarity for businesses and removes some additional costs to margins and/or consumers. A small cheer, but a cheer nonetheless. Separately, the deal also lowers the “rebate rate” drug companies pay to Britain’s National Health Service (NHS, the country’s public healthcare apparatus). The UK also agreed to boost spending on prescription drugs and cut the rebate paid by drugmakers on sales to the NHS from 23% to 15%. That is a response to drugmakers’ longstanding concerns, but all this phases in through 2035—which is a long way away, so who knows how that could change. So in effect, this could mean higher surface-level costs for the NHS, but the additional supply it may encourage could offset that. Overall, though, this is yet another example of negotiators hammering out details on trade agreements, providing a bit more clarity for companies and investors—even if the details create winners and losers.

MarketMinder’s View: As this piece mentions a few major retailers, we remind readers MarketMinder doesn’t make individual security recommendations, and any companies mentioned here are coincident to a broader theme we wish to highlight. With Black Friday now in the books, some preliminary spending data are in. Despite widespread predictions for a slowdown tied to inflation, American shoppers seemed to beat expectations. “Shoppers made an estimated $11.8 billion in online purchases on Friday, a 9.1 percent increase from last year, and spent $6.4 billion online on Thanksgiving, according to data from Adobe Analytics, a data collection and analysis platform.” This and other data cited herein suggest online shopping drove much of the strength, matching a years-long, steady trend of holiday spending’s digitization. Now, the article attempts to use these holiday sales as a way to see how the economy is doing at large now and for the rest of the year, which is a bridge too far. Past data don’t predict, and discretionary spending is a pretty small slice of total consumer spending—a big reason Black Friday isn’t an economic or market indicator. Rather, last week’s better-than-expected outcome suggests the doom and gloom leading up to Black Friday wasn’t warranted. If anything, this hints sentiment toward the US economy remains low.