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Good morning investors! Quarterly earnings reports from consumer companies are increasingly showing how consumers are diverging in their spending. Commonly called a “K-shaped” economy, companies are seeing wealthier Americans spend more while lower-income Americans are paring back. With more companies preparing to report earnings this week, that trend could continue.
Today we cover:
The US under pressure
Palantir beats
The EV situation
Reminder: Ether fell over 9%, trading other coins down as well, slipping below its critical $3,600 support level, shortly after a multimillion dollar hack affected a protocol on the token’s native network.
📊 Economy and News
US Consumer Strength Faces Holiday Test Amid Shutdown and Cost Pressures
The U.S. economy risks a slowdown as lower-income households face mounting pressures from a prolonged government shutdown, rising healthcare costs, and a softening job market, just as the holiday shopping season begins.
Key threats include:
Potential loss of SNAP food benefits for 42 million low-income Americans (blocked by a court ruling, but uncertain).
Higher ACA insurance premiums if subsidies expire, adding ~$1,000/year per enrollee for 20+ million people.
Furloughs and layoffs (e.g., Amazon, UPS) amid flat job growth and rising unemployment forecasts.
Despite resilient overall spending (2.7% annualized in August) and low unemployment, a "K-shaped" recovery persists: affluent consumers boost travel and luxury, while others hunt bargains and default on loans.
Economists like RSM's Joseph Brusuelas warn the shutdown could shave 1% off Q4 GDP, pushing growth to ~1%. Fed Chair Jerome Powell noted consumer defiance of gloom but highlighted bifurcation risks.
Offsetting factors: larger 2025 tax refunds and exemptions. Yet surveys show planned holiday cuts, fewer shoppers due to deportations, and sluggish wage growth (2% for ages 25-54).
Policymakers lack fresh data due to the shutdown, complicating Fed decisions in Trump's second term.
Global hits:
Indian economy loses steam in September.
Brazil tightens minimum capital requirement rules, could impact 500 firms.
Zimbabwe’s inflation set to drop amid stable currency and gold boom.
China’s factory activity slows down in October, missing expectations.
Rate cut delayed? Bank of America has delayed its ECB rate cut forecast to March 2026 from December 2025, citing stronger-than-expected GDP and inflation data that give the central bank reason to pause easing. Despite the pushback, BofA warns that resisting sufficient stimulus will cost eurozone growth and has abandoned its prior call for rates to return to 2% by 2027. Meanwhile, Fed Governor Lisa Cook remains undecided on a December U.S. rate cut, viewing it as a “live meeting” while monitoring tariff effects, labor risks, and inflation; she sees Trump’s tariffs likely causing only a one-time price increase.
Look here: US to pay reduced food aid benefits, but warns of weeks or months delay.
Kimberly-Clark agrees to buy Tylenol owner Kenvue in $48.7 billion deal, creating consumer staples giant.
China said it would consider some exemptions for chip exports impacted by the Dutch government’s seizure of Nexperia.
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📈 Stocks
S&P 500 6,851.97 (+0.17%)
DJIA 47,336.68 (-0.48%)
NASDAQ 23,834.72 (+0.46%)
BRENT CRUDE 64.23 (-0.01%)
* Prices as of Nov 4th, 12:20 AM UTC
Palantir beats again
Palantir crushed quarterly estimates and lifted Q4 guidance to ~$1.33B in revenue—way above the $1.19B analysts expected—thanks to booming AI demand. The company builds analytics tools for big enterprises and government agencies.
Even with the government shutdown dragging into its second month and risking key contracts, Palantir’s government revenue jumped 52% year-over-year to $486M. Military deals remain the core of its rise; it’s been outpacing legacy contractors for years and just secured a potential $10B contract with the U.S. Army.
For the full year, Palantir now sees ~$4.4B in sales (beating Wall Street’s $4.17B forecast) and free cash flow of $1.9B–$2.1B.
On the commercial side, revenue more than doubled to $397M, while total contract value for closed deals soared over 4x to $1.31B. In recent weeks, Palantir announced new partnerships with Snowflake, Lumen, and Nvidia.
The EV situation: Xpeng kept its hot streak alive, delivering 42,013 vehicles in October—its second time topping 40k this year. The boost follows the Mona series launch in late August, with deliveries starting in September. Xpeng lumps its main brand and Mona together, no split on China vs. global sales.
Among China's heavy hitters: BYD crushed it with 436,856 units (a 2025 record), but that's down 12.7% from last October amid a 32.6% profit plunge. Leapmotor hit 70,289, up 5.5% after breaking 60k in September. Huawei's Harmony alliance (Aito, Chery, Maextro) matched that exactly at 70,289.
Nio delivered 40,397 across its brands, with the premium Nio line jumping from 13,728 to 17,143 units—nearly tying Onvo's 17,342 record. Xiaomi stayed above 40k (exact TBD), while Li Auto slipped 6.4% to 31,767 after a marketing hiccup. Zeekr brought up the rear with 21,423, edging up from September's 18,257.
In the US, legacy automakers tanked on EVs as buyers rushed purchases before Trump-era credit changes kicked in. Ford's all-electric sales dropped 25% YoY (Mach-E -12%, F-150 Lightning -17%). Toyota sold just 18 BZ units, down from 1,401 last year. Kia and Hyundai's top models plunged 52-71% YoY, with month-over-month drops hitting 80% for Hyundai's Ioniq 5 and 71% for Ioniq 9.
New partnerships: OpenAI signs $38 billion compute deal with Amazon, partnering with cloud leader for first time. Elsewhere, Lambda, Microsoft agree to multibillion-dollar AI infrastructure deal with Nvidia chips.
Controversial: Pfizer files second lawsuit against Novo Nordisk, Metsera in bidding war over obesity biotech.
Warren Buffett may have cut Berkshire’s stake in Apple again in the third quarter.
Tesla faces a widening probe concerning alleged safety defects with the company’s flush-mounted, electronic door handles.
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