Berkshire Hathaway reveals $4.3 billion stake in Alphabet, cuts Apple
We are clearly in the midst of an economic boom that is expected to accelerate in 2026. Approximately 91% of the stocks in the S&P 500 have reported their third-quarter results, and revenues are up an average of 8%, while earnings have risen a whopping 15.4%. The average revenue surprise is 2.3% and the average earnings surprise is a stunning 10.4%. Of course, Nvidia (NVDA) will be the grand finale this earnings announcement season, and Costco (COST) will also announce after Nvidia. All the sectors in the S&P 500 are reporting revenue increases, while only the energy sector has a slight earnings decline of 0.6% due to low crude oil prices.
President Trump signed a bill on Thursday to end the 43-day federal government shutdown. Eight Democratic Senators broke away from Senate Minority Leader Chuck Schumer to vote with Republicans to reach 60 votes and break the filibuster, which will reopen the federal government. The government shutdown was largely over cuts to healthcare subsidies. Ironically, healthcare reimbursement is NOT being changed, so in the end, Senator Schumer’s shutdown did not accomplish anything, and there is now a call for a leadership change on the Democratic side.
President Trump is now proposing to pay at least $2,000 to many Americans from tariff revenues. On Truth Social, Trump said, “We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion,” he added, “Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2000 a person (not including high income people!) will be paid to everyone.” Obviously, this is an interesting development, especially with a Supreme Court decision on tariffs expected in January.
I expect that the British pound will erode relative to the U.S. dollar due to Britain’s domestic woes. Britain is preparing to raise taxes for the second time under Prime Minister Keir Starmer. The Wall Street Journal reported that Britain’s Treasury chief, Rachel Reeves, is expected to announce a tax hit of some 30 billion pounds, equivalent to around $39 billion, or about 1% of Britain’s annual economic output. This tax increase is aimed at narrowing Britain’s budget deficit, which ended 2024 at 5.7% of GDP. Due to the wealthy fleeing Britain and ongoing immigration problems, Starmer may have to declare an election in 2026 if his support dwindles.