Market Beats | China State-owned Firms to Halt Business with Li Ka-shing; US Fourth Quarter GDP Revised Up to 2.4%; US HHS to Cut 10,000 Staff; Ferrari to Raise US Price by 10% to Counter Tariff; Porsche, Mercedes Could Lose $3.7 Billion Amid Tariffs

—— China State-owned Firms to Halt Business with Li Ka-shing; US Fourth Quarter GDP Revised Up to 2.4%; US HHS to Cut 10,000 Staff; Ferrari to Raise US Price by 10% to Counter Tariff; Porsche, Mercedes Could Lose $3.7 Billion Amid Tariffs

1. China State-owned Firms to Halt Business with Li Ka-shing

China has instructed its state-owned enterprises to temporarily halt any new collaborations with businesses associated with Hong Kong billionaire Li Ka-shing and his family. This decision comes after Li’s plans to sell two Panama ports to a global consortium, led by BlackRock Inc., apparently displeased Beijing.

The directive, issued last week by senior officials, does not affect existing partnerships but blocks immediate approval for any new business activities linked to the tycoon. The aim is also to conduct a thorough review of the investments held by Li’s family both in China and internationally, to gain a clearer picture of their extensive business network.

While this order to pause new dealings does not necessarily indicate a complete prohibition on future collaborations with Li’s linked businesses, it significantly increases the pressure on the 96-year-old billionaire. This move is particularly sensitive given that the sale involved strategic assets like the Panama ports, placing Li’s CK Hutchison conglomerate at a delicate juncture amid escalating US-China tensions.

Looking ahead, Zhong indicated that Nongfu would continue its efforts to expand into overseas markets, signaling a strategic focus on international growth despite domestic challenges.

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2. US Fourth Quarter GDP Revised Up to 2.4%

The U.S. economy showed stronger growth than initially estimated in the fourth quarter of the previous year, while a key inflation measure was adjusted downwards, suggesting a more robust economic scenario than previously thought.

According to the third release of data from the Bureau of Economic Analysis, the Gross Domestic Product (GDP) grew at an annualized rate of 2.4% during the October-to-December period. Additionally, the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures price index excluding food and energy, was revised to a lower rate of 2.6%.

This updated GDP figure benefitted from higher contributions from net exports, government spending, and business investment. However, the growth in consumer spending, which is a major driver of the economy as it accounts for about two-thirds of GDP, was revised down to 4%.

Looking ahead, economists are predicting a slowdown in growth for 2025. This cautious outlook is influenced by growing concerns over President Donald Trump’s economic policies, particularly his aggressive trade stance. This apprehension has led Federal Reserve officials to lower their growth forecasts recently, and major financial institutions such as Goldman Sachs and Morgan Stanley have similarly adjusted their expectations.

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3. US HHS to Cut 10,000 Staff

Health and Human Services Secretary Robert F. Kennedy Jr. has unveiled a significant reduction in the workforce and restructuring of the department he leads, marking a continuation of the Trump administration’s efforts to substantially decrease the size and scope of the U.S. government.

In a bold move, Kennedy announced plans to cut 10,000 employees from HHS. This reduction, along with other departures due to buyouts, will decrease the agency’s workforce from 82,000 to 62,000 employees. Additionally, Kennedy intends to streamline the department by reducing the number of divisions from 28 to 15 and cutting the number of regional offices from 10 to five.

These changes are projected to reduce annual government spending by $1.8 billion. Kennedy stated that the restructuring aims to align the organization more closely with its core mission and new priorities, particularly focusing on reversing the chronic disease epidemic. He emphasized that the reorganized department would achieve greater output and efficiency at a reduced cost to taxpayers.

A significant aspect of the reorganization involves the merger of divisions focused on public health, substance abuse, mental health, and occupational safety into a single new entity, the Administration for a Healthy America. This consolidation is intended to enhance the department’s efficiency and effectiveness in addressing critical health issues facing the nation.

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4. Ferrari to Raise US Price by 10% to Counter Tariff

Home-price growth in the US experienced a slight acceleration in January, amid ongoing competition for a limited number of available homes on the market.

According to data from S&P CoreLogic Case-Shiller, a national gauge of home prices rose 4.1% in January from the same month a year earlier, marking an increase from the 4% annual growth recorded in December. Despite the typical seasonal slowdown during the colder winter months, which often sees a decrease in home-shopping activity, buyers who continued their search faced a shortage of listings.

Recent data suggests some relief may be on the horizon, with new listings in the four weeks ending March 16 increasing by 5.5% compared to the same period last year, as reported by Redfin Corp. However, high borrowing costs remain a significant hurdle for many potential homebuyers. The number of contracts to purchase previously owned homes dropped to a record low in January, affected not only by these financial barriers but also by adverse weather conditions.

In a more localized snapshot, the Case-Shiller index covering 20 major cities showed home values rising by 4.7% in January year-over-year, an increase from a 4.5% gain in the previous month. Among these cities, New York led with the most significant price increase of 7.7%, followed by gains in Chicago and Boston. Conversely, Tampa was the only city among the 20 tracked that experienced a decline, with home prices there falling by 1.5%.

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5. Porsche, Mercedes Could Lose $3.7 Billion Amid Tariffs

The Small Business Administration (SBA) is set to significantly reduce its workforce, announcing plans to cut 43% of its employees. This decision comes in response to initiatives spearheaded by Elon Musk’s Department of Government Efficiency, aiming to streamline government operations.

Currently, the SBA employs over 6,000 workers and aims to eliminate positions deemed “non-essential,” aiming to revert to staffing numbers that mirror those before the Covid-19 pandemic. This move is part of a broader federal effort under President Donald Trump and Musk’s directives to reduce the size of the government, reflecting a push towards increased efficiency.

In a statement released on Friday, the SBA emphasized that this strategic reorganization intends to not only restore the operational efficiency seen during the first Trump administration but also to sharpen its focus on supporting small businesses. Importantly, the agency assured that its core services, including loan guarantee programs, disaster assistance, and operations supporting veterans and field activities, will remain unaffected by the workforce reduction.\

This workforce reduction at the SBA is part of an ongoing series of cuts across federal agencies, following an order last week that required agencies to submit plans for substantial staffing cuts to the White House. This reflects a continuing trend towards downsizing and optimizing government functions.

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6. DOGE Cuts Funding for Hundreds of Affordable Housing Projects

Warren Buffett’s Berkshire Hathaway has increased its investments in the top five trading houses in Japan, lifting its stakes after successfully negotiating the removal of a 10% investment ceiling. The investment gains were notable in Mitsubishi Corporation, where Berkshire’s holdings went from 8.31% to 9.67%, and in Mitsui, where its stake rose from 8.09% to 9.82%. Similar increases occurred in Itochu, Marubeni, and Sumitomo Corporation, each seeing a rise of about a percentage point.

These trading houses play a crucial role in Japan’s economy, serving as key importers of essential raw materials such as oil, gas, iron ore, and copper, while also supporting the nation’s major export sectors including automobiles, electronics, and machinery.

Buffett, who initially revealed Berkshire’s investments in these companies in 2020, expressed growing admiration for them in his recent annual shareholder letter. He commended their business operations for their resemblance to Berkshire Hathaway, which itself evolved from a textiles manufacturer to a vast investment conglomerate.

Buffett also indicated his intention to maintain these investments for “many decades,” underscoring his long-term commitment to these Japanese firms.

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7. Congestion Pricing Gains More Support from New Yorkers

New York City’s contentious congestion pricing program is slowly winning over support, though it still hasn’t secured a majority of voter approval.

The program, which launched on January 5, charges most drivers $9 during peak hours to enter Manhattan south of 60th Street. Its goals are twofold: reduce traffic congestion and generate revenue to upgrade the city’s over-a-century-old transit system.

According to a recent Siena College poll of registered voters statewide, 40% believe the fee should be eliminated—mirroring the Trump administration’s push—while 33% support keeping the program in place. This marks a modest shift from a December poll, where opposition was at 51% compared to just 29% in favor.

Among New York City residents specifically, attitudes have notably reversed. Now, 42% say the toll should remain, while 35% want it scrapped, compared to December figures showing only 32% in support and 56% opposed.

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