It wasn't supposed to happen this way. Historically, November and December have been considered the best months of the year for stocks. The problem is that history has been turned upside down this year.

 

Take the fact that the U.S. Supreme Court is hearing a case on tariffs that have not been this high for 100 years. And then there are the lofty valuations of companies that are investing trillions of dollars in artificial intelligence. Many investors believe AI will usher in a new age for the world. And in case that doesn't convince you, the sudden weakening in private jobs for October was the lowest in years. That may not qualify as history, but the present administration's immigration policy and its impact on employment certainly do.

 

Now, some might argue that a decline would be beneficial for markets, as this melt-up in the averages has persisted for weeks. It has been so long since we have had more than a one- or two-day decline that most investors are conditioned to buy any dip, no matter how shallow.

 

But why now, you might ask. Perhaps because markets didn't decline as expected in September and October. Then there is the "what-if" scenario surrounding one of the lynch pins of Donald Trump's economic policy. "What if" the court rules against him? "What if" the government is forced to refund billions of dollars in collected tariffs? And if so, what will happen to the deficit that has been declining?

 

If you believe the president, who claims an adverse ruling on his tariffs could "literally destroy the United States," then you are most likely one of those who sold stocks this week. I suggest you read my latest column, "Trump's tariffs and the holidays," for my thoughts on any fallout from this court case.

 

Thanks to the continued government shutdown, which has now become the longest in history, the dearth of government data has forced markets to focus instead on private sector research data. One such data point released this week was from global outplacement firm Challenger, Gray & Christmas. It showed that last month was the worst October for layoffs announcements since 2003.

 

In the absence of the non-farm payroll data, which was scheduled to be released on Friday but wasn't, investors took the weak employment numbers at face value. Investors worry that, given the weakness was among existing job holders, rather than the absence of immigrants (legal or otherwise) seeking jobs, economic growth overall may be slowing.

 

At the same time, however, another service, ADP Private Payrolls, said the number of jobs added grew by 42,000 last month. The jobs were gained in the old economy, specifically in trade, transportation, and utilities. Great news for some, but none of those jobs came from AI-related industries.

 

Why is this important? Trillions of dollars are being invested in AI each year, including this year, last year, and the year before. This is the area that the market agrees will become a primary driver of economic growth in the future, starting now. Instead, information services and professional and business services lost jobs in an industry that should be hiring like crazy in these early stages of build-out.

 

More than 85 percent of companies that have reported quarterly results have beaten estimates; however, there is a catch. I had thought that these stellar earnings results would support markets. They have to some extent, but something is changing. Many of the AI names have declined after their earnings results were released.

 

That is a new behavior. In the past, traders have been buying AI stocks regardless of the company's earnings, whether good, bad, or indifferent. Investors are now questioning the sustainability of the AI boom and the ability of companies to justify their high valuations based on profit growth.

 

I half suspect that consumer holiday spending was front-loaded this year to avoid tariff-induced price hikes. If so, flat spending may not be taken kindly after years of increased end-of-year sales. Combine that with the AI valuation fears, tariff court case, and the government shutdown, and this wall of worry has grown too high for the average investor.

 

And even though the government shutdown continues, I maintain that it will be resolved sometime this month. Due to the increasing air travel fubar brought on by the shutdown, starting today, the FAA will cut 10% of flights at the 40 biggest airports as it prepares for a worst-case scenario of delays and canceled flights. Until now, most Americans have not been unduly affected by the shutdown. As Thanksgiving approaches, the holiday flight schedules will become far more critical to the nation. I expect irate calls to Congressional representative offices are climbing by the minute.

 

Marketwise, this pullback is a good thing. I have written several times in the last month that we needed a break from the relentless climb that has created an extremely worrisome condition in the markets. Hopefully, we will see a 5-6% decline in the averages, which will prepare us for a year-end rally. 

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

It is that time of the year when consumers begin planning for the holidays. It will also be a time when prices on almost everything are expected to rise. You can blame that on tariffs. After several months of absorbing rising import costs due to Donald Trump's tariff policies, American corporations have had enough.

 

Currently, approximately half of all goods imported into the United States are subject to substantial tariffs. Considering duties, limits, and other aspects of the president's trade policies, more than 90 percent of imports have been impacted in some way. This tariff debacle is truly a historic event, not seen in this country in over 100 years.

 

Up until now, the impact on U.S. consumers, who are already reeling from unrelenting inflation, has been negligible. That is because exporters and U.S. corporations have borne the brunt of these tariffs and the associated higher costs. The bad news is that Goldman Sachs economists believe that companies will now begin passing on as much as 70 percent of tariff costs via higher prices to consumers.

 

As it stands, predictions by research firms regarding consumers' willingness to spend over the next two months are mixed. Deloitte expects holiday spending to decline by 10 percent due to economic uncertainty, whereas Visa anticipates a 10 percent increase in holiday gift-giving. Gallup expects neither, with consumers spending about the same as last year. However, these forecasts assumed prices would remain in about the same range as before during the gift-giving season.

 

This week, all eyes were turned toward the Supreme Court. On Wednesday, the justices heard arguments over President Trump's unilateral decision to impose these steep tariffs on the world. Three lower courts have already rejected these tariffs on the ground that Trump illegally used a 1977 regulation, the Emergency Economic Powers Act, that grants presidents the power to regulate the economy during an emergency. This act was originally intended to deal with national emergencies, such as war or natural disasters, and its use in this context is a point of contention in the case.

 

At stake is the possibility that the court rules the tariffs illegal. As it stands, the lower courts have allowed the president to continue to collect tariffs until the higher court decides the case. And if the court rules against the president, will they also demand that the tariffs be refunded? 

 

The exact cost of a refund depends on when the case is decided and the amount that has been collected. We know the federal government raised $195 billion in customs duties in Fiscal Year 2025. Analysts expect that roughly $90 billion is in jeopardy. That amount dwarfs any refund the country has refunded in the past.

 

The tariffs collected and paid for by U.S. companies and American consumers have been used to reduce the country's deficit. If that were to be undone, some on Wall Street would not take that lightly because the deficit would balloon higher almost overnight.

 

On the plus side, if a refund were to be issued, corporations and exporters would benefit. Their profit margins would expand since they have paid the lion's share of costs year to date, as for what to we, the consumers, who have paid higher prices because of those tariffs, I see no chance of anyone giving me a refund for the grill or washing machine I purchased at a stiff mark-up this year.

 

No one should be surprised at this situation. Voters have long been aware that their president often takes shortcuts in everything he does, whether in business or politics. The betting market believes that the Supreme Court will rule against Trump's attempt to end-run the rules. The president's actions tell me that they may be right. Trump is preparing a Plan B in the event he loses. There are several laws already on the books that allow him to levy tariffs (with congressional approval), although the rate of tariff and the length of time are not open-ended. This process would take more time, but in the end, he could reinstate about 80-90 percent of the existing tariffs at lower rates. His administration has been working furiously on this fallback plan over the last two months.

 

Readers should not expect a decision from the Supreme Court anytime soon. The case is a thorny one involving the extent of presidential power and authority. It will impact U.S. relationships with numerous countries and could significantly undermine one of Trump's major policy initiatives. The judges know that they are walking a fine line.

 

If their decision is too draconian (i.e., no tariffs, refunds, etc.), this could have serious ramifications for everything from stocks and bonds to commodities, the dollar, and financial markets in general. They will likely find a middle ground that restrains the president but does not cause undue havoc in the financial markets.

 

The first day of hearings reportedly did not go well for Team Trump. The justices seemed skeptical of the president's authority to impose his most sweeping duties. In any case, it is unlikely that the verdict will be announced in time to save the holidays, although some optimists believe it could happen before the end of the year.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

It was a classic case of "buy the rumor, sell the news." Even though the Fed did cut interest rates again and a deal between China and the U.S. was announced, investors failed to celebrate.

 

Markets were bid up in anticipation of these events long before they happened. A Fed cut has been in the works for approximately a month. Expectations that the two largest economies in the world would reach a satisfactory arrangement were also well telegraphed as early as last week. On Sunday, Scott Bessent, the U.S. Treasury Secretary, all but said the deal is in the bag.

 

However, investors did not get all they wanted in either case. Markets had already priced in another rate cut in December with an 87 percent probability. And then came the comments by Fed Chair Jerome Powell in the Q&A session after the FOMC meeting. "A further reduction in the policy rate at our December meeting is not a foregone conclusion — far from it. Policy is not on a preset course."

 

Oops, said the markets. By the close on Wednesday, the chance of a cut dropped to roughly 60 percent and markets opened lower on Thursday as a result. It also didn't help that two of the largest tech stocks in the universe, Microsoft and Meta, disappointed investors, causing a loss of over 1 percent in the NASDAQ.

 

And then there was the deal between Presidents Trump and Xi on Thursday. The two leaders agreed to roll back a bunch of trade barriers that had never been implemented. These tit-for-tat, double-dare threats between the two nations ultimately proved to be just that. The sweeping controls on rare-earth magnets and draconian restrictions on Chinese companies disappeared like hot air, at least for the next year. However, there was some good news for soybean farmers (including Scott Bessent) as China will resume purchases.

 

The administration and the media hailed the latest truce as groundbreaking, but I don't see it. No agreements were committed to paper, so there is no legal binding on anything. Their fundamental differences over Taiwan, technological supremacy, and national security were not even mentioned.

 

 To me, this so-called framework allows both leaders a win. Beijing gets to continue stringing things along, buying itself even more time to mitigate any potential downside of U.S. actions against it. Evidently, the markets agreed, as both Chinese and American stocks fell after the announcements.

 

The shutdown continues. Supplemental Nutrition Assistance Program (SNAP) benefits cease at the end of Friday, impacting one out of eight Americans. Saturday marks the start of the open enrollment period for health-care programs under the Affordable Care Act. Look for numerous stories next week about the higher premiums for insurance that many of the 24.3 million on the ACA will need to pay.

 

The president, suddenly appearing concerned over the shutdown, posted that it is time to eliminate the Senate filibuster, stating, "The choice is clear — initiate the nuclear option." There has been a slight thawing of the congressional ice jam, but make no mistake, it is not about those issues.

 

The facts are, as I have said in the past, November marks a period leading up to Thanksgiving when air traffic increases. Air traffic controllers have not been paid. Newark already shut down for a day this week due to a lack of personnel in the tower. This is one area of the government shutdown that could generate significant blowback, as thousands of inconvenienced travelers are suddenly confronted with flight delays.

 

Fortunately for the markets, the earnings of Apple and Amazon beat expectations after the close on Thursday. That reversed the damage, and the markets recouped nearly all their losses only to drop gain. Strong third-quarter earnings are supporting the markets. With more than 60 percent of companies reported thus far, over 84 percent have beaten estimates by a wide margin.

 

Entering November, markets continue higher. The only difference that I can see is that the gains have slowed, and markets are alternating between some down and some up days. The same drivers, AI and tech, continue to lead, with a few other sectors alternating between gains and losses.

 

Precious metals have slowed their free-fall and are now consolidating. I suspect they could still see lower prices, so be careful. Cryptocurrencies are doing the same. Overall, I advise readers not to chase here but only add on dips like we had on Thursday (1 percent or more in the averages).

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Beef is no longer a grocery staple. It is becoming a luxury commodity, priced out of most consumers' everyday budgets. The average price of ground beef is now $6.30 per pound. Steaks are averaging $12.22 per pound. Ranchers want to keep it that way, but the president begs to differ.

 

In total, beef prices are hitting record highs as the U.S. cattle herd falls to its smallest size since 1951. From around 140 million head of cattle in the U.S. back in the '70s, the herd has dropped to 94 million head. Recently, even Donald Trump had to admit that beef prices are out of control.

 

"The only price we have that's high is beef — we'll get that down," the president said recently. No doubt his consumption of Big Macs has kept him focused on the price of ground beef while ignoring skyrocketing prices in other food items. Trump blamed the stubbornly high beef prices on reduced imports from Mexico and domestic drought conditions (but refused to acknowledge climate change).

 

His solution — quadruple beef purchases from Argentina and apply a lower tariff rate. In his mind, he saw a two-fold opportunity. Prop up his buddy, Argentinian President Javier Milei's  election chances and, at the same time, "bring our beef prices down."

 

As you may surmise, cattle ranchers were beginning to benefit from these nationwide higher prices after years of losses. Some were even considering investing their profits back into rebuilding their herds. So, additional imports were not on their wish list. But not all is as it seems.

 

American ranchers' response to his efforts surprised him, and the blowback came from across the industry. "Misguided," "an absolute betrayal," "a kick in the nuts," "he is picking winners and losers" — those were just some of the comments from ranchers I have read. The outcry was so extensive that about the only ranchers who did not voice their concerns were the Duttons.

 

As I have explained to readers in past columns, over the past decade, due to climate-driven droughts, inflation, and surging feed costs, ranchers struggled to survive. At the same time, consolidation among meatpackers and feedlots produced fewer buyers at auction for their cattle. Fewer buyers meant lower prices. Many could not survive, others limped along making few ends meet.

 

I asked myself why, after years of price increases, it is only now that some ranchers are turning a profit of sorts. Does it require a 14.7 percent increase in prices over the last 10 months, on top of prior years' hikes, for ranchers to turn a profit? And if not ranchers, who is benefiting?

 

Most ranchers in America are long-term supporters of Donald Trump. However, many see the administration's policies toward cattle production as far too simplistic to solve their real issues. Here once again, state capitalism has reared its misguided head.

 

The U.S. imports beef from dozens of countries and has done so for years. This year, despite record-high beef prices, Trump levied tariffs on U.S. imports of cattle, thinking this would help his voting bloc in cattle country not only turn a profit but also increase American beef production. Wrong.

 

Not only did he make an already bad situation for consumers much worse, but at the same time, despite these higher prices, ranchers saw little increase in the price they received for their livestock at the auction block. Why?

 

Ranchers claim that the meatpacking industry is the sector benefiting from the higher beef prices. You may recall that just four meatpackers control 85 percent of the U.S. beef market. Thanks to the president's tariff policies, continued inflation, and the immigration crackdown, processors face their own problems despite charging more for their products. That leaves individual ranchers as price takers with these huge conglomerates dictating prices at auctions.

 

As for increasing cattle supply, that takes years. Trump will be long gone before that happens, and so will his Secretary of Agriculture Brooke Rolins. In the meantime, the increase in Argentine beef will have at best a negligible effect on U.S. retail beef prices. Argentina produces about one-quarter of total U.S. beef output, making it the sixth-largest beef producer in the world. Yet, as an exporter to the U.S., Argentina ranks only ninth, supplying no more than 2.1 percent of total U.S. beef imports thus far in 2025.

 

What Trump's announcement has done, however, is immediately lower the auction prices ranchers are now receiving for their cattle. Still, it was effective in manipulating the Argentine elections in favor of his crony. If you didn't understand state capitalism before, I suspect you do now.

 

Ranchers say they are looking for market-based solutions, such as making it easier for start-ups to enter the business. They also want mandatory country-of-origin labeling, reduced costs for meat processors (read: immigration and tariff relief), and expansion of federal grazing lands. Some of these policies are already being rolled out. However, none of these actions will likely increase the herd or lower prices for years to come.

 

As it is, the population is rapidly changing its diet preferences, and if it continues, there will be little need to grow the cattle population. We are getting to that point quickly. Most people I know reserve meat consumption for special occasions, like graduation dinners, client lunches, or a once-a-week special grilling event.

 

Given that the USDA retail price per pound of chicken is $2.08 and pork is $4.29, we rarely eat meat at our house. Our meat consumption has dropped from several times a week five years ago to at best twice per month. There are benefits as well: the medical literature indicates that consuming less meat is a healthier choice for living longer.

 

I often say that the solution to higher prices is higher prices. Our newfound experiment in state capitalism, at least in the ranching industry, may preserve America's myths of cowboys and TV "Yellowstones," but at what cost? What does that say about the cost-effectiveness and efficiency of having a "protected" U.S. industry that requires $12 a pound steak to survive at all?

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

As of Friday, the government's closure is the second longest on record. The country has managed thus far, since much of the government's economic machinery keeps chugging along. As such, there is no reason why it can't continue.

 

By Nov. 5, if no compromise takes place, Donald Trump will make history once again — this time by beating his own shutdown record of 34 days during his first term. The partisan stand-off is so severe that the House no longer even meets, while the Senate continues its own version of Groundhog Day by voting and failing to pass any legislation.

 

There is no real urgency either, since Social Security benefits and Medicare payments still go out. The mail continues to be delivered, student loan payments are getting collected, ports are open, so tariffs are still being charged on imports, and the U.S. Treasury is still servicing the nation's burgeoning debt. And the administration has somehow found the money to pay U.S. Immigration and Customs Enforcement agents.

 

Today, Oct. 24, will mark the first missed paycheck for many federal workers. Service members were paid a week or so ago by moving funds around within the Defense Department. Americans who are dependent on the Supplemental Nutrition Assistance Program (SNAP) to eat have managed thus far, but these SNAP benefits will dwindle to nothing by next month.

 

Sure, there are disruptions. Clearly, federal workers and contractors are being affected through lost pay, work stoppages, and delayed contracts. Some economists estimate that $800 million in federal contracts is at risk each day. And we have until the Thanksgiving holiday before anyone cares about the air traffic controllers (unless, of course, there are a couple of near misses or a mid-air collision).

 

The GOP-controlled Congress is taking its direction from the White House, but the man in charge is too busy right now to divert his attention to opening the government. As I mentioned, the government shutdown is accomplishing much of what the administration had hoped it would. Bond yields are down, and spending has slowed considerably. His OMB chief has been able to cut several Democrat-backed billion-dollar projects, and there are fewer federal workers on the payroll.

 

Whether by intention or happenstance, the administration has successfully distracted investor attention from the shutdown, despite the media's insistence that it does matter. This week alone, Donald Trump has crowded out those concerns by instead focusing investors' attention on his on-again, off-again peace efforts to end the Russian/Ukraine war. His latest move, to add further oil sanctions on Russia, spiked oil prices higher by more than 5 percent.

 

In addition, Trump's attention was focused on shoring up last week's "done-deal" peace agreement in Gaza, which doesn't appear to be quite done yet. Then there is his escalating naval warfare on alleged drug boats off South America, his upcoming meeting with China's Xi Jinping, and lest we forget, his newest national concern. That would be a $250 million White House ballroom intended to put Europe's longest-reigning absolute monarch, Louis XIV's Palace of Versailles, to shame.

 

While the shutdown has left a data vacuum in government, the Consumer Price Index for September was released on Friday. It was a necessary use of available government funds, given that the CPI data is a crucial measure used by the Social Security Administration to adjust the dollar value of Social Security benefits. Wall Street forecasts called for an increase to 3.1 percent year over year. It came in at 3 percent.

 

Historically, shutdowns have not had a significant, lasting impact on the economy. That is because all that government spending will come back as soon as the government reopens. If some of that spending does not come back due to firings, failure to provide back pay, or spending cuts, the economy might slow for a quarter or so.

 

Quarterly earnings have been better than expected thus far. Analysts had expected an average growth rate of 7-8 percent. Out of 141 companies reporting on the S&P 500 Index so far, the gain has been 13.3 percent. Of the 63 companies included in that index, only nine have reported, and the growth rate was 26 percent.

 

This coming week, the Fed meets and is expected to cut interest rates by another one-quarter point. Trump will also meet Xi in South Korea for trade talks. The hope is that a breakthrough in trade will occur. Don't hold your breath.

 

 If perchance U.S. Treasury Secretary Bessent can cut a deal beforehand with his Chinese counterparts, markets should rally. If so, White House leaks will front-run the news. I will be watching soybean and China stocks as a tell. If his good friend Xi rebuffs his overtures, expect a little "Hell Hath No Fury like a President Scorned" action, and markets will swoon at the wrath of Trump. 

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.