Key Takeaways
- U.S. Treasury Secretary Scott Bessent expressed confidence in the U.S. economy's underlying fundamentals, projecting a 1990s-like productivity miracle driven by an ongoing AI investment boom and a sustainable capital-spending boom leading to employment growth.
- Bessent confirmed that President Trump is still expected to meet with Chinese President Xi Jinping in Korea, despite escalating tensions over China's rare earth export controls and recent tariff threats. The Treasury Secretary stated that the U.S. will not negotiate trade deals based on stock market fluctuations.
- The ongoing U.S. government shutdown is significantly impacting the economy, with Bessent citing estimates of $15 billion per day in losses and concerns over military personnel paychecks.
- The October US NY Empire State Manufacturing Index surged to 10.7, significantly exceeding expectations of -1.8 and the previous month's -8.7, indicating unexpected strength in the manufacturing sector.
- Blackstone is actively pursuing strategies to introduce private assets to 401(k) plans, aiming to tap into the vast $12 trillion U.S. defined contribution market.
U.S. Treasury Secretary Scott Bessent delivered an optimistic outlook on the American economy, highlighting a sustainable investment boom and the potential for a significant surge in productivity, reminiscent of the 1990s. He emphasized that the U.S. is currently experiencing "the hottest economy" with strong underlying fundamentals. Bessent noted that an employment boom typically follows capital-spending booms, and he is unworried about the prospect of mass unemployment from artificial intelligence, viewing the AI investment boom as being in its "third inning."
Despite this positive economic assessment, Bessent addressed ongoing challenges, including the U.S. government shutdown, which he stated is "hurting the economy by $15 billion a day." He also criticized Senator Schumer, suggesting the shutdown is influenced by political polling numbers. Bessent assured that the Treasury would be able to make paychecks for military personnel.
On international trade, Bessent confirmed that President Trump is "a go" for a meeting with Chinese President Xi Jinping in Korea, despite recent escalations over China's rare earth export controls. He reiterated that the U.S. would not negotiate based on stock market fluctuations, asserting that the U.S. will negotiate based on what is best for the country. Bessent indicated that China is attempting to "backfill narrative" on its rare earth moves and that the U.S. has "lots of levers to pull that could damage China" if diplomatic efforts fail. He expects a "group response" to China from allies including Europe, Australia, Canada, and India.
In economic data, the US NY Empire State Manufacturing Index for October significantly outperformed expectations, posting an actual reading of 10.7 against an estimated -1.8 and a previous -8.7. This indicates a robust and unexpected improvement in manufacturing activity in the New York region.
Conversely, Canada's manufacturing sales for August saw a month-over-month decline of -1.0%, slightly better than the estimated -1.5% but a notable drop from the previous 2.5%. Wholesale sales excluding petroleum also fell by -1.2% month-over-month, aligning with estimates but down from the prior 1.2%. Brazil's retail sales for August showed modest growth, with a 0.4% year-over-year increase and a 0.2% month-over-month rise, both meeting expectations.
In corporate news, Progressive (PGR) reported Q3 2025 earnings with an EPS of $4.45, surpassing the prior year's $3.97. However, September Net Premiums Written decreased by 1% month-over-month to $7.13 billion. Prologis (PLD) announced Q3 2025 Adjusted FFO of $1.49, exceeding the estimated $1.44, and raised its full-year EPS guidance to $3.40 to $3.50.
Blackstone is making significant moves to open up private assets to the $12 trillion U.S. 401(k) market, aiming to diversify its capital base and provide individual investors with access to alternative investments. This initiative aligns with broader industry trends as private equity firms seek new sources of capital.
Additionally, Oracle (ORCL) announced a collaboration with Microsoft (MSFT) to develop an integration blueprint aimed at enhancing supply chain efficiency and responsiveness for manufacturers. This partnership will leverage Oracle Fusion Cloud Supply Chain & Manufacturing with Microsoft's Azure IoT Operations and Microsoft Fabric to facilitate real-time data capture and automated business events. The NASDAQ 100 Futures extended their climb, rising by 1%, signaling positive market sentiment.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.