1. U.S. Retail Sales Rise
2. Private Equity May Be Allowed in 401(k) Plans
3. OpenAI-Musk Dispute Escalates
4. Fed Reports Rising Commercial Real Estate Loan Delinquencies
5. McDonald’s Invests $100M to Support Franchisees After E. Coli Outbreak
6. Newark Airport AirTrain Overhaul to Cost $3.5 Billion
7. Manhattan Congestion Pricing Plan Resumes
1. U.S. Retail Sales Rise
The U.S. Commerce Department reported that retail sales increased by 0.4% in October, primarily driven by strong auto sales. Excluding autos, sales grew by just 0.1%.
Among 13 retail categories, eight saw increases, with electronics and home appliance stores leading the gains. Auto sales hit a three-month high, while e-commerce sales grew at a slower pace, reflecting the impact of Amazon and Walmart’s promotional campaigns.
The data suggests that U.S. consumers remain financially healthy, potentially leading to a strong holiday shopping season. However, persistent inflation and rising prices—partly in anticipation of Trump’s proposed tariffs—could weigh on spending.
Stronger retail data has reduced the likelihood of a Fed rate cut in December, leading to declines in both U.S. stocks and bonds.
Source：Bloomberg – US Retail Sales Increase on Autos in Start to Holiday Season
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2. Private Equity May Be Allowed in 401(k) Plans
With U.S. retirement accounts like 401(k) plans holding over $11 trillion, major private equity firms see Trump’s potential return to office as an opportunity to push for regulatory changes allowing private equity investments in these accounts.
Alternative asset firms are expected to lobby a Trump administration to approve 401(k) investments in private equity, which has lower liquidity than stocks.
Apollo CEO Marc Rowan and other private market advocates argue that since retirement accounts are long-term investments, liquidity constraints should not be a major concern. They suggest that investors willing to sacrifice some liquidity could shift a portion of their stock allocations into private equity to seek higher returns.
A Trump administration is widely expected to take a more lenient regulatory approach compared to Biden’s.
Source：Bloomberg – Private Equity in 401(k)s Seems Newly Possible After Trump Win
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3. OpenAI-Musk Dispute Escalates
In an updated legal filing, Elon Musk accused OpenAI CEO Sam Altman of prioritizing dominance over safety in AI development. He also called for an antitrust investigation into OpenAI’s shift from a nonprofit to a for-profit model.
Musk’s lawyers claim that Microsoft and OpenAI have formed an anti-competitive alliance that not only consolidates market power but also seeks to eliminate rivals like Musk’s xAI.
The new lawsuit has expanded to 107 pages, compared to the 83-page original filing.
Source：Bloomberg – Musk Escalates Altman Legal Feud, Casting OpenAI as Monopolist
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4. Fed Reports Rising Commercial Real Estate Loan Delinquencies
The Federal Reserve’s semiannual regulatory report revealed that in the first half of 2024, delinquency rates on commercial real estate loans held by major U.S. banks rose to 11%, the highest level in a decade.
The most severely delinquent loans are concentrated in the largest banks, but smaller banks have also seen worsening conditions.
Fortunately, most banks have capital reserves exceeding regulatory requirements, maintaining financial stability.
Over the past year, the Fed has urged banks to negotiate repayment plans with struggling borrowers to prevent widespread defaults. Fed Chair Jerome Powell reassured that the U.S. banking system remains capable of handling commercial real estate risks.
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5. McDonald’s Invests $100M to Support Franchisees After E. Coli Outbreak
McDonald’s has committed $100 million to help franchisees recover from the recent E. coli outbreak and boost overall sales.
The investment includes $65 million to support franchisees directly and $35 million for advertising and promotional efforts.
McDonald’s sales dropped 12% week-over-week in the last week of October. While sales have started to recover, they remain significantly below year-ago levels. To attract customers, the company has launched aggressive promotions and deep discounts.
The E. coli outbreak has infected 104 people, and McDonald’s stock has declined 7% since the incident.
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6. Newark Airport AirTrain Overhaul to Cost $3.5 Billion
The Port Authority of New York and New Jersey has raised the budget for Newark Airport’s AirTrain renovation by 70%, from an initial estimate of $2.05 billion to $3.5 billion.
The project will modernize the aging rail system that transports 30,000 passengers daily. The higher budget accounts for inflation and pandemic-related construction delays.
The increasing cost reflects broader challenges facing major infrastructure projects, including supply chain pressures and higher construction risk premiums.
Similarly, the JFK Airport renovation budget has ballooned from $1 billion to $4 billion.
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7. Manhattan Congestion Pricing Plan Resumes
New York Governor Kathy Hochul is pushing to finalize an updated congestion pricing plan for Manhattan before Trump takes office, fearing potential delays due to a change in federal leadership.
Under the revised plan, starting in January 2025, all vehicles entering Manhattan’s central business district will be charged a congestion fee of $9—lower than the originally proposed $15—to ease the burden on working-class commuters.
The revenue from congestion fees will be collected by the MTA, which plans to use the funds as collateral to issue bonds for much-needed upgrades to New York’s 100-year-old public transit system.
On Monday, the MTA board will vote on the congestion pricing structure, which may gradually rise to $15 over three years.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.