With the end of the year quickly approaching, the news cycle is slowing. Investors seem more inclined to focus on eggnog and last-minute Christmas shopping. That’s not to say that the markets aren’t seeing a shift as final trading for the year is wrapping up. For the second consecutive week, we’ve seen a rotation out of tech stocks into sectors of the market that are less fully valued. Despite another year being almost over, I encourage you to remember the road we’re on is long and winding. We’re not in a Formula 1 car hurtling at 200mph toward the finish line. Take this time to savor your personal and professional accomplishments and spend time with family and friends. 2026 will be here before you know it.
While the news was indeed slow, there were two stories and one Federal Reserve (Fed) rate cut decision worth mentioning. Let’s start with the Fed since that’s the one that impacts us more directly. Caught in an internal tug-of-war over the risks of higher inflation and lower employment, it voted to reduce interest rates for the third straight time this year, lowering them by a quarter point. However, for the first time since 2019, one quarter of the committee voted against Wednesday’s rate cut. Among the strife, there was one unexpected development. The Fed is going to start quantitative easing again with the purchase of $40 billion in treasuries each month going forward. This move increases the money supply in the economy. In other words, it’s a stealthy way to ease conditions which support financial markets even if it decides not to cut rates again in the months ahead.
The next story is one that caught me by surprise. Given the size and scope of the tariffs President Trump imposed on China earlier this year, you would be forgiven for thinking that it may have hurt China. It turns out despite the tariffs, China’s exports exceeded $1 trillion in the first eleven months of the year, setting a record for the country. Turns out it ramped up exports of semiconductors and vehicles to pretty much everyone but the U.S. This represents an increase of 10% year-over-year. And to be clear, it comes at a time when U.S.-bound shipments fell 29%. It seems other trading partners more than made up for the loss from the U.S. Chinese exports to the European Union (EU) grew by 15% and goods shipped to Africa and Southeast Asia climbed by 28% and 8.4% respectively. I wouldn’t count China down and out just yet. In fact, quite the opposite.
The second story I came across concerns how companies choose what to charge. From Disney, to Amazon, and Uber to FIFA, something called dynamic pricing is on the rise. Using AI, companies can charge different people different prices for the same product in the same store on the same day. A newly released study by Consumer Reports in conjunction with Groundwork Collaborative has broken the story. At the forefront of this new development is Instacart, which is experimenting with algorithmic pricing. Using AI, the company can monitor a customer’s buying habits and price sensitivity in order adjusting pricing and maximize profits. To be clear, it isn’t changing prices by time of day, day of week, season, or demand, but instead by customer. In the study, over 200 volunteers simultaneously chose the same product from the same store and found price differences in approximately 75% of the items. Costco, Kroger, Safeway, and Target were among the retailers included in the study. The practice of dynamic pricing will likely grow in the coming years and could cost you a lot of money. I personally will be avoiding Instacart. Now you know.
Bruce J. Mason, MBA
