Weekly Research Briefing: Tariff Affordability

The Goldman Sachs Group Inc. strategist who correctly predicted Wall Street’s underperformance this year expects US equities to keep lagging for the next decade.

Peter Oppenheimer and his team recommended that investors increase diversification beyond the US as elevated stock valuations put a lid on gains. They expect the S&P 500 to achieve annual returns of 6.5% in the coming 10 years, the weakest among all regions. Emerging markets are projected to be strongest, at 10.9% a year.

After a decade of constantly superior performance, driven by a surge in technology stocks and the craze for artificial intelligence, the S&P 500 has lagged behind global peers significantly this year. The benchmark has climbed 16%, compared with the 27% rally in a worldwide MSCI Inc. index that excludes the US.

“Diversify beyond the US, with a tilt toward emerging markets,” Oppenheimer and his team wrote in a note. “We expect higher nominal GDP growth and structural reforms to favor EM, while AI’s long-term benefits should be broad-based rather than confined to US technology.”…

“The S&P 500 net profit margin and ROE currently stand near record highs, and many of the tailwinds to corporate profitability in recent decades are unlikely to boost profits to a similar extent going forward,” the strategists said.

Silicon Valley’s biggest players are flush with cash and were able to fund much of the initial AI build-out from their own coffers. As the dollar figures climb ever higher, they are turning to debt and private equity—spreading the risks and potential rewards more broadly across the economy.

Some of the financing is coming from plain-vanilla corporate bond sales, but financiers are making far bigger fees off giant private deals. Virtually every Wall Street player is angling to get a piece of the action, from banks such as JPMorgan Chase and Morgan Stanley to traditional asset managers such as BlackRock.

Investor appetite for data-center debt is so strong that some money managers have booked billion-dollar gains in a matter of days, even before construction of the facilities they are financing is complete.

Still, the longer-term performance is hardly assured. Big tech companies are expected to spend nearly $3 trillion on AI through 2028 but only generate enough cash to cover half that tab, according to analysts at Morgan Stanley.

Amazon.com Inc.’s first US dollar bond offering in three years has drawn about $80 billion of orders, underscoring investors’ seemingly endless appetite for technology debt as companies race to fund artificial-intelligence infrastructure.

The company is seeking to raise about $12 billion through the debt offering, with the proceeds set to be used for everything from acquisitions and capital expenditures to share buybacks, according to people with knowledge of the matter. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are managing the bond sale, the people said, asking not to be identified discussing private details.

Monday’s sale comes after Google parent Alphabet Inc. earlier this month sold $25 billion of debt in the US and Europe. Meta Platforms Inc. issued $30 billion of corporate bonds last month, the biggest such offering of the year, while Oracle Corp. raised $18 billion through high-grade notes in September.

“I don’t think we’re in the trough of disillusionment. I think it’s somewhere near the top, and soon we’ll see more companies not doing well. The narrative will be that this AI thing was overpromised, that there was nothing there, that the quality of the models is not there, that they do not work, that it was not worth it, and that all these companies failed. I think we are heading toward that very soon. But right after that, those same companies will start releasing applications that are completely game changing for humanity.” – Databricks CEO Ali Ghodsi

Google DeepMind has released a new artificial intelligence weather model that it says is faster and more accurate than anything it’s built before, while providing additional tools for energy traders.

WeatherNext 2 builds on DeepMind’s previous AI models, which have demonstrated how machine learning can outperform traditional prediction methods.

The new model not only provides more accurate two-week forecasts of temperature, pressure and wind, but can also better predict tropical storm tracks, according to DeepMind researchers. That means its predictions of a hurricane’s path are as accurate three days ahead as the previous method was at two days out, testing shows.

The new weather model has other improvements sought by energy traders, including hourly forecasts instead of 12-hour outlooks. It can also generate predictions roughly eight times faster than DeepMind’s previous AI weather model…

Advances from Alphabet Inc.’s London-based research wing, a tech heavyweight behind some of the most pioneering forecasting programs, are closely watched by the energy and agriculture industry, shipping firms, insurers and other weather-dependent businesses seeking a profitable edge in predicting temperatures, wind speeds, cloud cover and storm tracks.

Trane Technologies is deploying AI agents to manage building systems, such as air conditioning and lighting. Nu Skin has an in-house large language model that will give customers beauty tips while collecting data to sell more personalized products. Agentic AI is the “next frontier” at Allstate Corp., Chief Executive Officer Tom Wilson said. These digital agents will speed claim settlements and offer tailored services. Colgate-Palmolive is using AI to improve inventory management and to personalize marketing to customers.

Two companies in the trucking industry, though, especially exemplify how AI tools are bolstering profits even as competitors struggle amid a three-year freight downturn.

C.H. Robinson Worldwide Inc., a freight forwarder that matches cargo with carriers in all modes of transportation, touted its use of AI for increasing market share and posting the best quarterly operating margin since 2022. The company, which employs 450 engineers and data scientists, handles 40% more shipments per employee at its trucking unit than three years ago as AI helps automate the “quote-to-cash life cycle of a load,” CEO Dave Bozeman said on a third-quarter earnings call…

XPO Inc., which consolidates small loads into one truck, said AI was instrumental for increasing adjusted operating income by 10% in the third quarter and expanding margins by 150 basis points in a historically long cargo slump. The carrier is using AI to increase sales by sifting through reams of data to pinpoint potential new customers and to cut costs by cutting the miles driven to deliver loads and reducing hauls of empty trailers.

@LizAnnSonders: November Empire Manufacturing Index jumped to 18.7 vs. 5.8 est. & 10.7 prior…new orders up to 15.9 vs. 3.7 prior; shipments up to 16.8 vs. 14.4 prior; prices paid down to 49.0 vs. 52.4 prior; employment up to 6.6 vs. 6.2 prior

Federal Reserve Governor Christopher Waller repeated his view that the central bank should again lower interest rates when policymakers meet in December, citing a weak labor market and monetary policy that is hurting low- and middle-income consumers.

“With underlying inflation close to the FOMC’s target and evidence of a weak labor market, I support cutting the committee’s policy rate by another 25 basis points at our December meeting,” he said in a speech delivered at the Society of Professional Economists Annual Dinner. “My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order.”…

Waller highlighted the hit to households from high costs for mortgages and auto loans and noted that a boom in stock prices driven by optimism around artificial intelligence isn’t yet translating into job creation…

“A December cut will provide additional insurance against an acceleration in the weakening of the labor market and move policy toward a more neutral setting,” Waller said.

Former Federal Reserve vice chair Lael Brainard said she would support a rate cut at the central bank's December meeting, warning that cracks are forming "under the hood" of an economy increasingly defined by an AI-fueled divide.

"I would be concerned about the weakening labor market," the veteran economist said at Yahoo Finance Invest 2025. "I think I would take the risk that perhaps tariffs push prices higher for a little longer against the risk that we really see a self-reinforcing downturn in the business sector that leads to real pain for American households."…

"The economy at the top level is strong," she said. "But again, it's being driven by this really important set of investments in AI. The rest of the economy under the hood is really stuck."

SEATTLE, Nov. 17, 2025 /PRNewswire/ -- Home values are falling for more than half of U.S. households. New research from Zillow®(opens in a new window) shows 53% of all U.S. homes have lost value since last year — the highest share since 2012, the tail end of home value declines after the Great Recession.

But the vast majority of homeowners have seen their home values rise substantially in the time they've owned them — 67% growth at the median — and losses are rare; just over 4% of homes have lost value since they were last sold, a smaller share than before the pandemic…

Most homes have lost value from their peak, with the average drawdown at 9.7%; that hasn't worsened substantially over the past three years. It is a larger setback than the tiny 3.6% in spring 2022, but about level with pre-pandemic rates, and a far cry from the 27% average drawdown in early 2012…

Metros that saw some of the fastest growth early in the pandemic and the two most expensive metros have the largest share of listings priced below their last sale, led by San Francisco (14%), Austin (13%), San Jose (9%), San Antonio (8%) and Dallas (7%).

@TheTranscript_: $AA CEO: Alcoa will not invest based solely on tariff incentives
"We will continue to evaluate it, but we won't make an investment decision simply on a tariff. Tariffs can and do change over time. So we won't be plowing $100M into the ground at this point based on a tariff cost"

@JavierBlas: CHART OF THE DAY: While most of the critical minerals talk in the US is about rare earths, something far more important is happening: US aluminum all-in costs have surged to a record as traders/smelters demand huge physical premia on top of LME prices due to Trump’s tariffs.

Morgan Stanley launched a dedicated research product covering private companies, joining rivals including JPMorgan Chase & Co. and Citigroup Inc. as investor interest in unlisted startups grows.

The bank on Tuesday opened a page for private-company content in its research portal that “will spotlight the innovators and trends that are reshaping traditional business paradigms,” according to an internal memo seen by Bloomberg News.

The new page will feature reports that discuss private companies’ impact on public-market competitors and research into single names, according to a Morgan Stanley spokesperson. It will also include a series that focuses on venture-capital activities and multimedia content…

Closely held companies fell through the cracks of Wall Street analysts in the past due to a lack of financial information. But many of those are now too big to ignore. OpenAI’s roughly $500 billion valuation would put it among the top 20 largest companies in the S&P 500.

Nearly 1,600 startups across the world have a valuation of $1 billion or more, according to data compiled by PitchBook. These firms had an aggregate value of about $6.5 trillion as of Nov. 5, a 22% increase from the end of last year.

Goldman Sachs is vying to capture its biggest share of the deals market in almost a quarter of a century, with Wall Street’s dominant investment bank emerging as one of the big winners from the rebound in mergers and acquisitions.

The bank has advised on 34 per cent by value of the $3.8tn of global mergers announced this year, according to data from LSEG, up from 28 per cent in 2024.

With less than seven weeks of the year remaining for new deals to be announced, the performance puts Goldman on track for its biggest share of the market since it captured 34.26 per cent in 2015.

Some burnt lenders have insisted the collapse came without warning — Brian Friedman, president of First Brands’ longtime banker Jefferies, told investors last month that “fraud is conventionally not detectable in the real world”. But other creditors that dug deeper were able to avoid the fiasco.

Donald Clarke, a veteran of so-called “field examinations” for asset-backed lenders, said serious financial issues at First Brands were “right there in plain sight”. His firm Asset Based Lending Consultants conducted due diligence on First Brands in 2022 on behalf of a private capital firm that was considering extending a $200mn bridging loan to the company.

“The first red flag,” according to Clarke, was First Brands’ refusal to grant him access to one of its storage sites where he wanted to inspect the collateral underpinning the prospective loan. “They said to us: ‘You will not go to the warehouse,’” Clarke said. “Really? We’re going to lend you $200mn but you can’t go see the inventory? I mean, are you kidding me?”