Unadorned Notes: December 1-4, 2024
Private Payrolls Growth Slows; Black Friday Online Sales Surge; U.S. Manufacturing Contraction Eases; China’s Manufacturing Activity Expands; French Government Collapses Amid Crisis
Economics, Finance, and Business
Private Payrolls Growth Slows: Private payrolls increased by 146,000 in November 2024, below the Dow Jones estimate of 163,000 and October 2024’s revised 184,000, according to ADP. Education and health services led job gains with 50,000 new positions, followed by construction and trade-related sectors, while manufacturing shed 26,000 jobs. Small businesses reported a net loss of 17,000 positions, reflecting continued labor market softness. Wage growth accelerated to 4.8% year-over-year, marking its fastest pace in over two years. The Bureau of Labor Statistics is set to release its own report Friday, with forecasts suggesting nonfarm payroll growth of 214,000.1
Black Friday Online Sales Surge: Black Friday online sales reached $10.8 billion, a 10.2% increase from 2023 and more than double the total from 2017, according to Adobe Analytics. Mobile devices accounted for 69% of global online purchases, as shoppers embraced digital tools like mobile wallets and buy-now-pay-later options. In-store foot traffic fell 8.2% from last year, with steep discounts of 40% or more driving brick-and-mortar visits. Popular items included electronics, beauty products, clothing, and gift cards, with overall discounts exceeding expectations. Cyber Monday is forecasted to set another record, with $13.2 billion in projected sales and significant discounts on apparel and electronics.2
U.S. Manufacturing Contraction Eases: U.S. manufacturing contracted for the eighth consecutive month in November 2024, though the ISM PMI rose to 48.4, its highest level since June 2024, indicating a slower pace of decline. New orders expanded for the first time since March 2024, while input prices dropped significantly, reflecting easing cost pressures. Despite these improvements, weak production and employment levels, coupled with concerns over potential tariffs and sluggish demand, highlighted ongoing challenges for the sector. The Federal Reserve’s recent rate cuts and resilient business investment, especially in AI and aerospace, offered some optimism for recovery. Economists forecast stronger nonfarm payrolls growth in November 2024, with construction spending also showing signs of rebound.3
India Growth Forecasts Cut: India’s GDP growth slowed to 5.4% in the July–September 2024 quarter, the lowest in seven quarters and well below the Reserve Bank of India’s 7% projection. Economists, including those from Goldman Sachs and Emkay Global, have lowered their full-year growth estimates to around 6%, citing weak manufacturing output and sluggish urban consumption. High inflation, falling wages, and declining corporate profits have dampened economic activity, with calls for interest rate cuts intensifying. While the RBI has resisted easing borrowing costs, analysts predict potential liquidity measures or a rate cut in December 2024. The slowdown has increased pressure on the government to accelerate capital expenditure to offset weak private sector growth.4
China’s Manufacturing Activity Expands: China’s Caixin Manufacturing PMI rose to 51.5 in November 2024, signaling the fastest growth in new orders in over three years, supported by renewed export demand. The private survey, which focuses on smaller and private firms, contrasted with the official PMI of 50.3, reflecting broad sectoral improvement. Analysts attribute the expansion to recent stimulus measures, including fiscal spending and monetary easing, though concerns persist over real estate weakness and geopolitical risks. October 2024’s stronger retail sales provided further evidence of recovery, but industrial profits fell 10%, underscoring uneven growth. U.S. tariff threats may have temporarily boosted export orders, as companies rushed to secure shipments ahead of potential new trade barriers.5
China EV Sales Hit Records: China’s EV market continued its rapid growth in November 2024, with BYD, XPeng, Zeekr, and others achieving record sales amid intensifying price competition. BYD led with 506,804 EVs sold, a 67.9% year-over-year increase, while XPeng and Zeekr posted record monthly gains of 54.2% and 106.1%, respectively. Li Auto and Nio saw slight declines in deliveries compared to October 2024 but maintained strong year-over-year growth. Tesla’s discounts and incentives have added to the competitive environment, with manufacturers offering similar deals to bolster December 2024 sales. Analysts expect China’s EV sales to reach 7.8 million in 2024, up 28% from 2023, as the global transition to sustainable transportation accelerates.6
Korean Battery Makers Brace for Trump: South Korean battery manufacturers, including Samsung SDI and LG Energy Solution, have significantly benefited from the U.S. Inflation Reduction Act (IRA), which has spurred EV and battery investments, particularly in Republican and swing states. Combined, Samsung and LG plan to allocate over 40% of their production capacity to U.S. facilities by 2027, with major projects in Indiana and Georgia. However, Donald Trump’s potential tweaks to the IRA, particularly targeting the $7,500 EV tax credit, could slow EV sales and impact demand for batteries. Despite this, higher tariffs on Chinese imports may boost Korean battery makers by enhancing their competitiveness in the U.S. market. Global demand for energy storage and EV batteries outside the U.S., especially in Europe, remains a strong growth driver for these companies.7
Intel CEO Gelsinger Steps Down: Intel CEO Pat Gelsinger abruptly resigned after nearly four years marked by declining revenues, costly turnaround efforts, and missed opportunities in the AI chip market. The company named CFO David Zinsner and Client Computing Group GM Michelle Johnston Holthaus as interim co-CEOs while a search for a permanent successor begins. Under Gelsinger, Intel struggled to compete with rivals like Nvidia, whose dominance in AI chips reshaped the industry, leaving Intel’s foundry ambitions and financial performance under pressure. Despite securing $7.87 billion in government funding for factory expansions, Intel’s multiyear turnaround strategy has yet to yield results. Analysts now suggest a potential separation of Intel’s foundry and product businesses to address operational challenges.8
Crypto IPO Market Reopens: President-elect Donald Trump’s pro-crypto stance is fueling optimism for initial public offerings (IPOs) by firms like Circle Internet Financial and Kraken, which were previously hindered by regulatory obstacles under the Biden administration. Trump’s expected changes at the SEC, including a more lenient view on classifying cryptocurrencies as securities, have raised hopes for successful listings. Circle, a stablecoin provider, refiled for a traditional IPO and has seen renewed investor interest amid rising crypto market enthusiasm, with Coinbase stock soaring 65% since the election. An IPO wave could expand mainstream exposure to crypto assets, benefiting firms like Coinbase, which holds equity stakes in Circle and other crypto ventures. Analysts predict the reopening of capital markets to crypto could spark innovation and bolster the U.S. as a global hub for digital assets.9
BlackRock Acquires HPS for $12B: BlackRock announced a $12 billion all-stock deal to acquire private credit firm HPS Investment Partners, expanding its presence in the rapidly growing private credit market. HPS, which manages $148 billion in assets, will form the foundation of a new private financing solutions unit within BlackRock. The acquisition is expected to increase BlackRock’s private markets fee-paying assets by 40% and aligns with CEO Larry Fink’s strategy to bolster higher-margin alternative investments. This move follows other significant BlackRock acquisitions in 2023, including Global Infrastructure Partners and Preqin, aimed at strengthening its position in private markets. Rival firms like Apollo, Blackstone, and Ares remain larger players in private credit, but the HPS deal positions BlackRock as a stronger competitor.10
U.S. Politics, Policies, and Geopolitics
Biden Pardons Son Hunter: President Joe Biden issued a sweeping pardon for his son, Hunter Biden, covering all potential federal crimes from 2014 to 2024, citing political targeting by opponents. The decision followed Hunter’s convictions for tax evasion and lying on a gun purchase form, as well as accusations of influence-peddling during his time on the board of Burisma. The White House defended the move, with Press Secretary Karine Jean-Pierre stating the pardon was necessary to correct a politicized process. Republicans, including Donald Trump, condemned the action as an abuse of power, while some Democrats also voiced criticism. Legal experts noted that the presidential pardon is irrevocable and cannot be overturned by the incoming administration.11
Trump Warns BRICS Over Dollar: President-elect Donald Trump has threatened 100% tariffs on BRICS nations if they pursue a new currency to rival the U.S. dollar, citing risks to the dollar’s global dominance. Analysts consider the threat largely symbolic, as the BRICS summit failed to make meaningful progress toward such a currency, with internal divisions and competing priorities among members like China and India. The U.S. dollar remains the dominant global reserve currency, accounting for nearly 49% of global payments and $7 trillion in reserves. Critics argue Trump’s rhetoric could backfire by fueling anti-dollar sentiment, potentially accelerating efforts by countries like Saudi Arabia to diversify away from dollar-based transactions.12
U.S. Tightens Chip Export Controls: The U.S. Commerce Department announced new export controls targeting China’s semiconductor and AI industries, restricting the sale of advanced chip-making equipment and technologies. Officials stated the measures aim to curb China’s military advancements and reduce its ability to produce high-end AI tools. In response, China banned the export of critical materials like gallium and germanium to the U.S., escalating tensions between the two nations. Beijing accused the U.S. of abusing export controls and disrupting global supply chains, while the Biden administration defended the actions as necessary for national security. The tech rivalry reflects broader geopolitical tensions, including concerns over Taiwan and China’s aggressive push for technological self-sufficiency.13
Chinese Hackers Breach Telecom Networks: Chinese hackers, identified as the Salt Typhoon group, infiltrated eight U.S. telecommunications companies in a months-long espionage campaign, targeting prominent figures including President-elect Donald Trump and Vice President-elect JD Vance. The hackers potentially accessed systems for government wiretapping requests, with compromised networks still under investigation by U.S. cybersecurity agencies. The Biden administration has established a unified coordination group and briefed Congress, with officials calling the breach one of the most severe intrusions into U.S. telecom infrastructure. Telecommunications providers, including AT&T, Verizon, and T-Mobile, are collaborating with federal agencies to address the vulnerabilities. China has denied involvement, but U.S. lawmakers and officials warn of significant risks to national security and potential foreign surveillance.14
French Government Collapses Amid Crisis: The French government, led by Prime Minister Michel Barnier, collapsed after a no-confidence vote passed with support from both left-wing and far-right lawmakers, marking the shortest tenure of any modern French administration. The political impasse stems from Barnier’s controversial $63 billion budget plan aimed at addressing France’s fiscal deficit, which exceeds 6% of GDP, far above EU guidelines. President Emmanuel Macron now faces the challenge of appointing a new prime minister to prevent a government shutdown and restore stability. The crisis has sparked concerns about rising borrowing costs for France, with bond yields surpassing those of Greece, highlighting fears of broader economic fallout in the eurozone. Analysts warn that prolonged instability could further embolden populist forces on both the far right and left.15
South Korea Faces Impeachment Crisis: South Korean President Yoon Suk Yeol faces impeachment proceedings after briefly imposing martial law, a move that evoked the nation’s authoritarian past and sparked widespread protests. The opposition-controlled National Assembly submitted a motion to impeach Yoon, citing his alleged abuse of power and failure to uphold democratic principles. The constitutional court, which would decide the impeachment’s outcome, is currently understaffed, potentially delaying proceedings for months. Yoon’s decision has strained relations with the United States, prompting postponed diplomatic meetings and raising concerns over the U.S.-South Korea alliance. Analysts believe Yoon’s presidency is likely to end prematurely, whether through resignation or impeachment.16
Syrian Rebels Retake Aleppo: Syrian opposition forces launched a surprise offensive, seizing most of Aleppo, Syria’s second-largest city, marking their first presence there since 2016. The newly formed Military Operations Command coalition, comprising Islamist and moderate factions, declared the offensive a response to escalating government and Iranian militia attacks. Government forces have retreated, with Russian and Syrian airstrikes targeting rebel positions in Aleppo and Idlib provinces. Kurdish forces have expanded their presence in Aleppo, creating tensions and clashes with rebel groups. The loss of Aleppo is a major setback for President Bashar al-Assad, signaling a shift in the balance of Syria’s long-standing civil war.17