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Executives said they were pleased with the third-quarter results overall, that they're seeing younger generations hanging out at the mall again, but the SPARC joint venture was a drag on the business.

Simon Property Group, a real estate investment trust and the nation’s largest developer of malls, mixed-used and outlet centers, continues to see plenty of opportunity in the mall.

“I’m pleased with our financial and operational performance in the third quarter,” said chairman and chief executive officer David Simon, during a conference call going over third-quarter results on Friday. “We saw increased leasing volumes, occupancy gains, and total retail sales volumes. Demand for our space from a broad spectrum of tenants is strong and steady, and we continue to strengthen our unique retail real estate platform through our growing development and redevelopment pipeline. This combined with our A-rated balance sheet, really sets us apart and allows us to focus on the future. We raised our dividend again to $2.10. We’re now at our historical high overcoming the arbitrary, capricious closing of our real estate during COVID[-19].

“The mall continues to be a unique gathering place,” Simon said. “If you talk to really new and exciting companies like Shein or Skims…they all believe in our product. And so we’re seeing a rejuvenation of the younger consumers wanting to hang out at the mall.”

Simon cited some interesting growth possibilities including putting up micro or mini distribution facilities within certain centers or in retailers, and investing more in lower-tier malls, which up to now have generally provided cash flow for improving top-tier malls. “I do think there’s a real potential to improve them because in many cases, we’re the only game in town. And given the lack of supply and our ability to reinvest, I do think we can make real strides in the bottom tier,” Simon said. “Not with every asset,” he added, “but the majority of them. So that’s a big focus going into 2025, without question.”

The company’s net income for the three months ended Sept. 30 was $475.2 million, or $1.46 per diluted share, down from $594.1 million, or $1.82, a year earlier.

The quarter included a non-cash net loss of $49.3 million due to the mark-to-market accounting for a fair market adjustment of the Klépierre exchangeable bonds issued in November 2023. Additionally, income in the year-ago period included non-cash after-tax gains of $118.1 million primarily due to the partial sale of the company’s interest in its SPARC joint venture with Authentic Brands Group.

Real estate funds from operations grew 4.8 percent to $3.05 per share in the third quarter compared with $2.91 a year earlier. Domestic and international operations had “a very good quarter” and contributed 15 cents of growth driven by a 3 percent increase in lease income.

Domestic property net operating income increased 5.4 percent and portfolio net operating income increased 5 percent compared to the prior year period.

In other third-quarter results, occupancy as of Sept. 30 was 96.2 percent, a 1 percent increase from 95.2 percent a year ago. Base minimum rent per square foot totaled $57.71 as of Sept. 30, compared with $56.41 a year ago, an increase of 2.3 percent. “We still have room to grow our occupancy, but more important than that is bringing in the right tenants in the right center in the right location. That’s a huge focus for us,” Simon said.

Reported retailer sales per square foot was $737 for the trailing 12 months ended Sept. 30.

The board declared a quarterly common stock dividend of $2.10 for the fourth quarter, an increase of 20 cents, or 10.5 percent, year-over-year. The dividend is payable Dec. 30.

On Sept. 12, the 184,000-square-foot, phase two expansion of Busan Premium Outlets in Busan, South Korea, opened with new fashion and sports brands, “in vogue” food and beverage brands, and ample gathering and green spaces, the company said. Simon owns 50 percent of this center.

On Aug. 15, Tulsa Premium Outlets in Jenks, Okla., opened with 338,000 square feet. Simon also owns 100 percent of this center.

Last quarter, Simon’s digital marketplace was rebranded Shop Simon, from Shop Premium Outlets, to include sale and discounted merchandise from Simon’s regular-priced retailers while continuing to offer outlet products. Additionally, a nationwide marketing campaign, Meet Me at the Mall, designed to depict malls as a go-to destination across generations, was launched.

On the SPARC joint venture, Brian J. McDade, executive vice president and chief financial officer, said: “SPARC underperformed as the lower income consumer continues to be more cautious in their spending. We first highlighted the inflationary impact in the second half of 2022 relative to this consumer. Performance was below expectations at Forever 21 and Reebok. SPARC and JCPenney did, however, record sequential improvements in comp sales during the third quarter, which sets these brands up well for the important upcoming holiday season. We are not sitting still, and we expect to have some positive announcements by year-end with respect to these businesses.”

There is growing industry chatter that high-end puffer jacket maker Moncler could be considering making a bid for London-listed Burberry to create an outdoor specialist giant. Several industry sources say Bernard Arnault, CEO and controlling shareholder of industry leader LVMH which recently invested in Moncler, is keen to see such a deal happen.

Moncler and Arnault believe Burberry can be turned around and more value extracted from the brand with the right strategy and management and away from the market’s scrutiny.

The potential deal has emerged as demand for Moncler’s shiny puffer jackets is cooling. The brand appears to have hit a peak in sales growth, industry analysts say. Last week, Moncler reported a 3 percent drop in like-for-like revenue in the third quarter, slightly worse than analysts expected.

If Burberry’s turnaround were successful, it would give Moncler a significant boost. Also there would be great synergies between the two companies. One obvious one is in the supply chain. Moncler is the best-in-class manufacturer of puffer jackets and Stone Island, which belongs to Moncler, also makes high-quality outdoor jackets. It would be “plug and play” for Burberry as the two outerwear specialists could make the British brand benefit from their supply chains and improve its own range of high-quality jackets of all kinds.

Burberry declined to comment. Moncler did not reply to requests for comment.

There could also be synergies in terms of boutiques. Burberry needs to downsize its portfolio, analysts believe, particularly if it is going to focus on outerwear and reduce its fashion offering. Many of its stores are too big. Hence, it could potentially hand over some locations to Moncler. Pruning Burberry’s portfolio would also lower costs and improve the company’s profitability.

In September, LVMH took a 10-percent stake in the investment company Ruffini Partecipazioni Holding, controlled by CEO Remo Ruffini which has a 15.8 percent stake in Moncler. Last month, the two companies said they had agreed not to increase their stake in Moncler to more than 20 percent in the next three years.

“I have been told by bankers close to Burberry that the company was feeling vulnerable, which means that a bid could be in the works,” one industry source told Miss Tweed on condition of anonymity. Another industry source said he had dinner with Remo Ruffini’s two sons Pietro and Romeo last summer and “they were discussing Burberry at length and what needed to be done to turn around the company.”

Moncler has been looking at Burberry for many years, financial sources say. But the company’s market valuation was too high to consider making a bid. Now that its market capitalisation is £2.9 billion, down from close to £7 billion in 2023, its pricetag looks much more attractive.

Burberry’s share price has been going up steadily in recent weeks on speculation that a bid could be afoot. On Friday, Burberry shares closed at 818 pence, or 43-percent higher than its September low point of 517 pence reached on Sept. 10.

MASTER OF THE TAKEOVER

If Moncler was to make an offer for Burberry, it would probably be either in shares or a mix of cash and shares, bankers believe. At the end of 2023, Moncler had net cash of €1.033 billion, excluding liabilities for store leases. Hence, the company does not have enough cash on its own to make a full-cash takeover bid. However, LVMH could provide financing if needed, bankers say.

Arnault is a master of the takeover. The luxury tycoon created the world’s biggest luxury goods group, thanks to an aggressive acquisition strategy that earned him the moniker “the wolf in cashmere.” Burberry has long been seen as a takeover target from bigger groups, including Arnault’s arch rival Francois-Henri Pinault, who controls Gucci parent Kering.

Kering is weak at present because Gucci is struggling to turn itself around. So, it looks unlikely that Kering would be in a position to mount a rival bid, particularly since it may have debt issues of its own if its cash flow does not markedly improve in the near future.

Arnault has already snapped up a stake in Moncler from under Pinault’s nose. Ruffini spoke as recently as last spring about his ongoing talks with Pinault about the Frenchman taking a stake.

That said, Arnault may have bid competition from across the pond. Some investors have been saying that Tapestry could make an offer for Burberry after the U.S. group’s deal to acquire its close rival Capri was blocked by the U.S. Federal Trade Commission on Oct. 25.

“We calculate that buying Burberry at a 30% premium to the current share price (748p) would cost around €4 billion and could generate a 10% pretax return on investment, assuming that the EBIT margin can return to the 11.0% level,” Bernstein wrote last month about the potential tie-up between the two companies.

Tapestry owns accessible luxury brands Coach, Kate Spade and Stuart Weitzman which trade in a much lower price category than Moncler and Burberry. Therefore, from a strategic point of view and market positioning, Burberry and Moncler have more in common.

Also, synergies between Tapestry and Burberry would not be as attractive as they would be between Moncler and Burberry, industry analysts say. Thus, a Burberry-Moncler tie-up would make more sense than with Tapestry, investors say. Moncler has established itself as a market leader in outdoor clothing, a category which has grown strongly in the past 15 years, “eating Burberry’s lunch in the process.” Focusing on that segment is one of Burberry’s many missed opportunities, some industry analysts say.

If Moncler is serious about making a bid for Burberry, it may want to hurry up. Legally, Tapestry cannot get out of its deal to acquire Capri before February 2025, also called the “stop date.” Therefore, Moncler’s approach could not be challenged by Tapestry before that time.

SHARE PRICE RISE

The brand’s new ad campaigns released last month have been welcomed by investors and contributed to the rise in the company’s share price. They signal a change in focus from fashion to outerwear, a field in which Burberry has much more legitimacy than in fashion and something investors have been asking for many years, as Miss Tweed wrote on Friday. Burberry is finally doing what it should have been doing for years: focusing on its heritage as a British outerwear company. Initiated by the previous CEO Jonathan Akeroyd, the company’s new CEO Joshua Schulman, in place since July, is getting the credit. It is unfair but little can be done about that.

On the back of the new ad campaigns, many investors, analysts and journalists said they felt that for the first time in years, the brand felt relevant again.

“It is refreshing to see Burberry go back to its core DNA,” Luca Solca, luxury goods analyst at Bernstein, told Miss Tweed. “The new campaign goes back to basics: it is quintessentially British and showcases the most iconic Burberry products.”

Bernstein was the first broker this week to upgrade Burberry’s rating to “outperform.” It called the company “our preferred self-help story.” Bernstein said it was encouraged not only by the new campaign but also by the company’s new strategy with regard to pricing.

“Burberry's plans on pricing are starting to make sense,” Bernstein wrote in a note published on Oct. 30. “Department stores are reporting a pragmatic view on what the brand can do, with a focus on opening price points at a more realistic level, especially in product categories like leather in which the brand’s credibility is low.”

Shortly after Bernstein, HSBC upgraded Burberry to a “buy” rating. “We think management's priority will be rebuilding brand equity and regaining share, with margin expansion coming as a consequence,” the broker said in a note published on Oct. 31.

“Burberry’s heritage is outerwear: the brand was founded in 1856 when Thomas Burberry, a former draper’s apprentice, opened a store in Basingstoke, England, focused on outdoor attire. In 1879, Burberry invented gabardine, a lightweight, breathable, weatherproof and tearproof cloth. We would view it positively if Burberry were to build up its brand equity on its DNA – outdoor and gabardine – as it would make sense for customers to rely on the brand for what it is best known for. Once the Burberry outerwear category becomes an unavoidable purchase destination, then stretching the brand towards other businesses more meaningfully could be successful. Today, the €2,000 handbag category is very crowded and it seems that consumers are not willing to give Burberry credit in a leather category where it has traditionally been a follower.”

Few industries stand to gain — or lose — more on US election day than renewable sources of power

At the mouth of New York’s Hudson River, Norwegian oil and gas producer Equinor is building the largest US port for offshore wind, and a potential monument to America’s energy future — or its past.

As Americans brace for one of the closest presidential elections in the nation’s history, investors and executives alike have been parsing campaign statements for which industries stand to gain or lose the most in the next administration. But as election day nears, one is clearly emerging as the most exposed to the outcome: renewable energy.

“A Harris-Walz win next Tuesday is good news for the offshore wind industry. A Trump-Vance win next Tuesday is terrible,” Sean McGarvey, president of the North America’s Building Trades Unions, which works on offshore wind projects, said at a conference this week. His predictions that Kamala Harris would win the election were met with unanimous applause.

Donald Trump has vowed to stop offshore wind projects on “day one” if re-elected. He has also pledged to “terminate” the Inflation Reduction Act, President Joe Biden’s landmark climate law that included lucrative tax credits to drive down the cost of renewable energy and turbocharge the pace of decarbonisation.

Nearly $450bn in private investment has flowed into the US energy sector since the IRA’s passage, according to the Clean Investment Monitor. Consultancy BloombergNEF estimates a repeal of the IRA will result in a 17 per cent drop in new renewable capacity additions from 2025 to 2035, with offshore wind the hardest hit, falling 35 per cent.

A recent Goldman Sachs analysis of market outcomes concluded renewables could be the biggest winner under Harris, and tied for biggest loser under Trump, along with tariff-sensitive sectors.

Unlike solar and onshore wind, offshore wind requires federal permits and is most vulnerable to changes in office. The Biden administration turbocharged offshore wind deployment, setting an ambitious target to deploy 30GW by 2030 and approving 16GW of commercial-scale projects, up from zero at the start of his presidency.

Molly Morris, Equinor’s US president of offshore wind, cited the “certainty of the commitment” for renewable energy as the most important factor to advance offshore wind.

Equinor broke ground in June on its 73-acre project, known as the South Brooklyn Marine Terminal. It will serve as an assembly site for its offshore wind project, Empire Wind 1, which is eligible for IRA tax credits, and accommodate future offshore wind projects in the region.

Whether Trump or Harris wins next week’s election will have ramifications across corporate America. Bloomberg Intelligence predicts a Trump presidency could reduce capital requirements for US banks, undermine subsidies in the Affordable Care Act, and lower the liability shield for Big Tech companies. A Harris presidency would resemble policies set by the Biden administration, increasing scrutiny of banks, Big Tech, and pharmaceutical companies, and continuing the implementation of the IRA and rules to curb emissions.

“I’ve been unapologetic about who we’re supporting,” said Sheldon Kimber, chief executive of renewables developer Intersect Power, who introduced Harris at a fundraiser earlier this year. The company has started construction on nearly all of its projects to safeguard itself from potential changes to tax credit rules.

A full repeal of the IRA would face steep challenges. While the IRA passed with no Republican support in Congress, GOP areas of the country have been the main beneficiaries, with more than three-quarters of all manufacturing projects announced in the first year of the law’s passage headed to the party’s districts, according to an FT analysis.

In August, 18 congressional Republicans wrote a letter to Speaker Mike Johnson urging the party leader to “prioritise business and market certainty” in consideration of efforts to repeal or reform the IRA.

“We see not only steel in the water and people working, but people working in red states and blue states,” said Doreen Harris, president of the New York State Energy Research and Development Authority. “It would be difficult to imagine throwing that all away.”

While Trump rolled back restrictions on fossil fuel production and limits to emissions from power plants and cars, he also renewed tax credits for solar and wind projects and electric vehicles. US renewables deployment continued to grow under his presidency.

Wind capacity grew 45 per cent between 2016 and 2020, while solar capacity more than doubled, according to the Energy Information Administration. In his debate with Harris, Trump said he is a “big fan” of solar.

Analysts say potential Trump policies that pose a high risk to the US transition are tariffs on Chinese goods and changes to the IRA’s tax credit for EVs, which have become a culture war issue since his presidency. China is the dominant producer of clean energy technologies and refines the majority of the mineral inputs.

The Biden administration has set a target to reduce emissions by 50 per cent to 52 per cent from 2005 levels. A May forecast from Wood Mackenzie anticipates a slower energy transition under Trump, resulting in 683mn tonnes of additional carbon emissions in the energy sector and a $322bn reduction in anticipated clean energy investment by 2030.

“[Companies] are going to go to Europe. They’re going to go to other places. They’re not going to come here . . . It’s anti-business,” said Elizabeth Yeampierre, executive director of Uprose, a Brooklyn community organisation that has lent its support to the Equinor project. Next to her office is a barbershop with a flag that reads: Trump 2024 Take America Back.

Riad Salameh was arrested on graft charges and accused of undermining Lebanon’s economy, as the Israel-Hezbollah war further destabilizes the country

BEIRUT—Known for his love of Cuban cigars and luxury Paris abodes, Riad Salameh has long been a part of this country’s loathed elite. But for a time, the public loved the central bank governor for steering Lebanon into the global middle class after its civil war ended, and then shielding it from the 2008 financial crisis.

Now, Salameh is one of the most hated men in Lebanon.

The former Merrill Lynch banker is blamed for the epic economic meltdown that destabilized Lebanon, weakened its institutions and created a political vacuum that helped empower Hezbollah. Israel’s offensive against the militant group has killed more than 2,700 people in Lebanon, most of them since September, and forced hundreds of thousands from their homes. Israel has launched thousands of airstrikes in Lebanon to roll back Hezbollah after it began launching rockets into Israel last year.

After spending a year as a fugitive in a chalet overlooking the Mediterranean, Salameh now sits in a Lebanese jail cell, awaiting trial on embezzlement charges that he denies, including a new one leveled against him on Oct. 31.

France demands his extradition to face money laundering and tax fraud charges, and Interpol issued a Red Notice in response. The U.S. sanctioned him for allegedly siphoning off funds from Lebanon’s central bank—and using them to buy luxury apartments in European cities including Paris for his son and former mistress.

Even before the current war, Lebanon’s economic crisis had pushed half the country into poverty. The national currency is worth less than 2% of its value against the dollar in 2019. The Lebanese have virtually no state-supplied electricity.

How Salameh’s case in Lebanon plays out could have far-reaching implications. An indictment could signal that Lebanon is serious about confronting corruption in the country’s political system, a fractious power-sharing of three main sects, Shiite Muslims, Sunni Muslims and Christians. That could ease the path to an international bailout and aid in postwar reconstruction. A full accounting of Salameh’s alleged crimes also would shine a spotlight on decades of broader government corruption that bankrupted the country.

But because Lebanon’s political factions exert influence over the judicial system, few expect the case against Salameh to expand beyond the current, relatively small case. The case also risks inflaming tensions between those factions. Investigators say they still haven’t had access to central bank balance sheets that would tell the full story of the country’s financial ruin.

“He knows where the bodies are buried,” said David Schenker, a former U.S. Assistant Secretary of State for Near Eastern Affairs. “The powers that be, the political elites, would rather just put this guy on ice, isolate him, remove any possibility that he might turn state’s evidence and implicate countless members of the Lebanese elite.”

After Salameh retired last year following three decades as governor of Lebanon’s Banque du Liban, he settled into a luxurious life as a fugitive, free to ignore France’s arrest warrant due to Lebanon’s reluctance to extradite its citizens. Salameh, a Maronite Christian and dual Lebanese-French citizen, relaxed in a pair of chalets in the beachside towns north of Beirut, smoked Cohiba cigars and dined in a marble-floored creperie next to stone cliffs on the Mediterranean.

It all abruptly ended on Sept. 3, when Salameh showed up for questioning at the Ministry of Justice in Beirut. During the interrogation, a prosecutor told security officers to handcuff him and lead him upstairs to the prosecutor general’s office, where officials detained him on charges of embezzling funds from the central bank, according to witnesses. In October, a judge denied his request to be released from pretrial detention.

Lebanese prosecutors charged Salameh with illegally taking $40 million from the bank. In separate cases, European prosecutors and the U.S. government accuse him of stealing $330 million.

Far more serious was the Lebanese banking crisis in 2019, which sparked an economic contraction that the World Bank said was one of the three worst of the past 150 years, comparable to Spain’s during its 1930s civil war. Economists and foreign leaders, including French President Emmanuel Macron, have said Salameh effectively turned Lebanon’s financial system into a Ponzi scheme, an accusation he denies.

Salameh, 74 years old, has denied the corruption charges against him, saying he amassed personal wealth in the private sector before taking the Banque du Liban governorship in 1993. Among his roles, Salameh was a portfolio manager for Lebanon’s wealthy former Prime Minister Rafiq Hariri, who was assassinated in 2005.

Salameh’s lawyer didn’t respond to a request for comment on the charges and his detention. “I believe what I’m trying to do and achieve is within the laws of the country, so I’m not breaking laws, and to the good of this country, my country,” he told CNBC International in 2020.

For years after the civil war, Lebanon appeared to defy financial gravity. The Lebanese middle classes bought cars, vacationed in Europe and partied at Beirut’s joyous nightclubs. The country became a haven for artists, intellectuals and financiers, and a playground for wealthy visitors from around the world.

The financial crisis in 2019—exacerbated by the massive Beirut port explosion in 2020—revealed an economy built on an illusion.

Under Salameh’s leadership, the central bank borrowed heavily and offered high borrowing rates for dollar deposits. Lebanon hurtled toward a dollar shortage after a drop-off in remittances from the country’s millions of expats following the Arab Spring, when revolution and war shook the Middle East.

The bank also pegged the value of the Lebanese pound to the dollar, allowing people to easily convert, but it lacked the dollars to cover all the accounts. Economists described this arrangement as a pyramid scheme. The bank called the borrowing-rate arrangement “financial engineering,” an attempt to build up reserves of foreign currency.

The 2019 crisis triggered a bank run followed by protests demanding an overhaul of the political system. Lebanon’s political elites, including Hezbollah, refused.

In less than a year, millions of people fell into poverty. Some robbed banks at gunpoint to retrieve their own savings. With their wages almost worthless, Lebanese soldiers began to desert. Hundreds scrambled onto boats attempting to reach Cyprus.

Many Lebanese remain bitter that they can’t retrieve their savings that are still locked in the country’s banking system, which is still largely unreformed. For those people, Salameh is enemy number one.

“He is the accountant of the mafia,” said Ibrahim Abdallah, 44, who said he had some $3 million saved from his work in Dubai as a real-estate developer when the crisis hit and is now an activist for depositors’ rights.

Salameh leveraged his position at the central bank to enrich himself, Lebanese prosecutors and other Western officials allege. In one alleged scheme, he funneled $330 million to a shell company owned by his brother in the British Virgin Islands through an arrangement that gave the company a commission on years of central bank transactions, according to the U.S. Treasury Department.

While Lebanon sped toward financial ruin, Salameh used the funds he accumulated to buy high-end real estate in France, Germany, Luxembourg, London and elsewhere, U.S. officials say. The properties allegedly include an apartment in an elite Paris neighborhood registered in the name of his former Ukrainian mistress, Anna Kosakova, and an office building on the Champs-Elysées.

The globe-spanning corruption case around Salameh reached a crescendo in June 2021. As Lebanon was deep in economic crisis, Salameh flew on a private jet into Paris’s Le Bourget airport, where customs officials searching his luggage found $7,710 and more than €84,430—much of it in 500-euro banknotes. He had declared he was carrying only €15,000, according to a French police document seen by The Wall Street Journal.

During questioning, Salameh said he had forgotten the money was in his suitcase.

“Where does the money you are carrying come from and can you provide us with proof?” his interrogator asked him.

“It is my personal money. I do not have proof on me, but I can get some,” he responded, according to the police document.

Salameh’s September arrest wasn’t based on his alleged role in Lebanon’s financial crisis nor on the other accusations.

Lebanese prosecutors instead are holding him in connection with a separate alleged embezzlement scheme in which the Banque du Liban bought and sold treasury bonds with a London-based company called Optimum Invest, founded by a distant relative named Antoine Salameh.

In the alleged scheme, the Banque du Liban would lend money to Optimum, which would buy treasury bonds from the bank, and then sell them back at an inflated price, according to an audit report by the risk consulting firm Kroll seen by The Wall Street Journal that was provided to Lebanese prosecutors.

“It’s a microcosm of everything that was wrong with the central bank in terms of fraudulent accounting, commissions paid to insiders to personally enrich themselves, a lack of transparency, all that wrapped into one neat transaction,” said Mike Azar, an international financial analyst closely following the Salameh case.

Some Trump aides worry Cantor CEO is talking too much in public—getting ahead of election and a more formal decision-making process

At a campaign fundraising dinner on Oct. 24 at the New York restaurant Sadelle’s, Howard Lutnick, the billionaire chief executive of Cantor Fitzgerald, told a crowd of about two dozen wealthy donors that he needs their help filling thousands of political jobs if Donald Trump returns to the White House.

Lutnick, who addressed the crowd during the dinner’s cocktail hour, said he wanted résumés from anyone they knew for possible positions. Those at the meeting included the New York Jets owner, Woody Johnson, among others.

The co-chair of Trump’s presidential transition team, Lutnick has burst onto the scene in recent weeks with his activist recruiting approach and willingness to talk about nearly all of it in public.

This has startled some Trump allies, who believe Lutnick should be keeping a lower profile before all the votes have been counted and especially before Trump has weighed in on key personnel decisions.

One lobbyist who attended the New York dinner said that Lutnick’s approach felt like overkill and that the Wall Street executive was operating like a one-man human-resources department. Others close to Trump are wary of Lutnick’s ties to New York’s financial elite, worrying that he will persuade the former president to hire the kind of Wall Street veterans who sought to undermine some of Trump’s policy moves during his first term, such as steep tariffs on imports.

Despite that baggage, Lutnick has managed to win over many of Trump’s most-trusted allies, in part by showing fealty to the core tenets of Trumpism in his many television interviews.

Trump’s son Donald Trump Jr., who serves as an honorary co-chair of the Trump transition team and has said he would block “bad actors” from getting jobs in his father’s administration, praised Lutnick’s approach.

“Howard’s not a regular Wall Street guy—he’s a real MAGA guy. Have you heard him talk about tariffs? Have you heard him talk about shredding the deep state bureaucracy? He’s one of us,” he said in a statement to The Wall Street Journal.

The Trump campaign also backed Lutnick in a statement to the Journal.

“Howard Lutnick has volunteered his time to co-chair the Trump-Vance transition. In this role he is gathering a broad cross-section of policy experts and talented leaders for President Trump to choose from for his administration after the election,” a senior Trump campaign adviser said.

Lutnick has some top Trump allies in his ear. He has spoken with Elon Musk, who is working hard to try to help Trump win the election and has expressed a plan to help the new administration completely revamp and streamline the government, potentially cutting the budget by $2 trillion a year.

In their conversations, Musk and Lutnick have talked about ways to cut government spending, a person familiar with the exchange said.

Lutnick has also been in frequent contact with Jared Kushner, Trump’s son-in-law, who hasn’t played a visible role in the 2024 election but was a main player in Trump’s 2016 transition team. Kushner has been advising Lutnick on potential Trump hires, according to people familiar with the conversations. Lutnick has called Kushner for references when he recognizes certain hires who worked with Trump’s son-in-law in the last administration.

Kushner has guided Lutnick on how to proceed with the hiring process if Trump wins. He advised Lutnick to give Trump three or four options for every position and let the former president make the final decision on who is best to serve.

Lutnick confirmed in an October interview with the independent journalist Michael Tracey, that Kushner is “actively helping” him on the transition front but didn’t provide further details.

Lutnick’s team has asked for lists of people working for the campaign and Trump-affiliated outside groups so it can consider them for jobs in a Trump administration if he wins, according to people familiar with the matter. Presidents have to fill roughly 4,000 politically appointed positions upon taking office. More than 1,000 of those positions require Senate confirmation.

Lutnick disclosed several days ago in a CNN interview that he had recently spoken for more than two hours with Robert F. Kennedy Jr. During the CNN interview, Lutnick questioned whether vaccines are safe, echoing Kennedy’s widely debunked position and sparking backlash from public health officials.

Lutnick later clarified in a social-media post that he, his wife and his children had been vaccinated, but said he wants to share federal data with Kennedy so he can investigate vaccine safety. Kennedy, Lutnick said, won’t lead the Department of Health and Human Services if Trump wins.

Lutnick also said Musk likely wouldn’t get a job in a Trump administration because he can’t sell his companies. Instead, he said Musk would help from the outside by writing software for the government. (Musk has said publicly that he plans to run something called the Department of Government Efficiency, though few details have been released about how this would work or what his actual role would be.)

The Lutnick CNN interview annoyed some Trump’s allies, who said that Lutnick’s comments created an unnecessary distraction days before the election and that he spoke too freely about personnel decisions that Trump hasn’t yet weighed in on.

Lutnick is consulting some of the country’s most prominent executives as he builds out his personnel database. Lutnick has spoken with the Blackstone chief executive officer and Trump ally, Steve Schwarzman, to assist in the personnel recruitment process, according to a person familiar with the conversations. A spokeswoman for Blackstone didn’t respond to a request for comment.

Others who have spoken with Lutnick include Harold Hamm, executive chairman of Continental Resources, and the political commentator Tucker Carlson. Lutnick said in a television interview last month that he has had conversations about the transition with the likes of Apollo Global Management CEO Marc Rowan and the brokerage firm founder Charles Schwab.

Many of Lutnick’s meetings feature the Cantor CEO calling himself a “mosaic painter” and discussing his plans to present to Trump a variety of personnel options for each position, according to a person familiar with the conversations. He has reaffirmed to potential Trump hires that he isn’t the one making the final decision on who is selected to work in what would be a second administration.

Lutnick told the Journal in a recent interview that his experience running Cantor Fitzgerald, which hired thousands of employees after most of its New York staff was killed on Sept. 11, 2001, makes him uniquely suited for his transition job.

While Trump had a number of notable economic achievements during his first term, his White House was marked by constant infighting between his economic advisers. Lutnick’s Wall Street connections have some Trump advisers nervous that he could recruit high-powered executives who might not share the former president’s affinity for imposing tariffs on trading partners and pulling back from multilateral international agreements.

But Lutnick has taken pains to prove to Trump that he isn’t the kind of “globalist” financial executive that many of the former president’s allies detest. He has made clear in interviews that he is on the hunt for loyalists who won’t stand in the way of Trump’s agenda, and he has enthusiastically touted Trump’s plans for a suite of stiff tariffs on U.S. imports.

“Donald Trump,” Lutnick said during a speech at Trump’s rally at Madison Square Garden last month, “is going to build the greatest team to ever walk into government.”

The job market is slowing but consumer spending is strong, posing a riddle for central-bank officials as they reduce interest rates

Federal Reserve officials are expected to cut interest rates by a quarter percentage point at their meeting Thursday because inflation has continued to make progress toward their 2% goal.

Officials began lowering rates at their previous meeting in September by making a larger half-point cut. They are trying to figure out where, exactly, rates should settle after high inflation over the past three years led to a dramatic series of rate increases.

“We’re entering this new phase: Policy is going to become less restrictive over time, and that’s because the Fed is more confident on where inflation is going—that it’s going back down to 2%,” said Loretta Mester, who retired as Cleveland Fed president in June after 10 years in the job.

This week’s meeting should lack the suspense of the prior one, in which markets were left guessing over the size of the first rate cut in four years. Officials would like to avoid the spotlight because their meeting concludes two days after the presidential election, and the Fed strives to maintain an apolitical DNA.

Tuesday’s election also prompted the Fed to push back its meeting by a day. The central bank, which typically concludes its two-day meetings on Wednesdays, will do so this time on Thursday.

While this week’s meeting may lack drama, officials face potentially thorny debates in the months to come. First is the decision on where rates should settle. Second, while the election result won’t influence this week’s decision, any policy changes by the next president and Congress that reshape the economic outlook could also alter the Fed’s interest-rate path.

Strong consumption, softer hiring

Policymakers face a stubborn economic puzzle that could influence whether they will feel pressure to slow down or speed up rate cuts in the months ahead. The issue: The labor market continues to show signs of cooling, but consumer spending has been solid.

Economic data released last week put an exclamation point on this riddle. The economy grew at a solid 2.8% annualized rate in the July-to-September quarter, buoyed by consumer spending that has defied expectations of a slowdown for the past year. Some economists have pointed to such resilience as a sign that the Fed’s rate stance isn’t as tight as some officials think it is.

At the same time, demand for labor has steadily cooled. The private sector added just 67,000 jobs a month, on average, for the three months through October, the lowest since the pandemic hit in 2020. While the unemployment rate held steady at 4.1% last month, the share of workers who were permanently laid off ticked up to its highest level of the year, one of several signs pointing to less demand for workers.

It isn’t clear how long these trends—steady consumption with a slowing labor market—can last.

In one scenario, stronger consumer spending will continue to help stabilize the labor market because it will maintain solid demand for workers. In that more optimistic circumstance, the recent cooling in the labor market would reflect a postpandemic normalization and the Fed would be able to make fewer rate cuts.

More ominously, further weakness in income growth could weigh on consumer spending in the months to come, making the economy more vulnerable to a slowdown and potentially calling for more cuts.

A brighter income picture

Officials are also navigating through a fog of volatile data that has been revised from one month to the next. Several officials characterized the September rate cut as appropriate because inflation had fallen notably.

In the run-up to that meeting, the unemployment rate had ticked up to 4.3% in July and payroll growth had slowed. At the time, consumers had appeared to be spending down their savings to propel growth.

But revisions to government data after the meeting showed income growth had been stronger than initially reported. As a result, the personal savings rate was revised upward, meaning consumers might not be as tapped out. The revision “removes a downside risk to the economy,” Fed Chair Jerome Powell said at a conference on Sept. 30. “These were very large, healthy revisions.”

Powell suggested solid readings on economic activity could make officials somewhat more comfortable at the margins that the economy isn’t deteriorating. Still, he said labor-market data has historically provided “a better real-time picture” of the economy than data on gross domestic product. Solid activity data is “not going to stop us from looking very carefully at the labor-market data,” he said then.

‘Janky’ reports

Two whiplash labor-market reports have followed. Last month, the Labor Department reported that job growth had been stronger than expected in July and August, and payroll gains were exceptionally strong for September. That led to speculation that the Fed might need to consider slowing down the pace of future rate cuts.

Then last week, employment figures for August and September were revised lower. Moreover, payroll growth was much weaker than anticipated in October—some of it likely caused by strikes and hurricanes.

In the run-up to this week’s meeting, officials had cautioned against significantly rethinking their interest-rate outlook on the basis of any single monthly report. “I’ve been saying we should expect the data to be—what I’ve been using is, ‘janky,’ to bounce around a bit,” said Atlanta Fed President Raphael Bostic in an interview last month. “We may get ‘janky’ reports from time to time, and the question will be, ‘Do they signal a new trend?’”

Fed officials are likely to proceed with a quarter-point cut this week in part because they are trying to set policy based on their forecast that inflation will continue to decline. Inflation has slowed over the past year as prices of energy and goods have fallen. Many officials no longer see the labor market as a source of inflation because wage growth is cooling.

Officials often stress that their decisions are “data dependent,” meaning they will update their outlook for interest rates as their forecast for the economy changes. “‘Data dependence’…does not mean ‘data reactive,’” said San Francisco Fed President Mary Daly in an interview last month. “The jobs market data being revised and going back and forth is just a good lesson of why you can’t be data-point dependent.”

Bostic said the right approach in such an environment is to “remain patient and embrace the choppiness, if you will, in building a strategy and figuring out sort of where things should go.”

Whether 7-Eleven Is Bought or Not, Convenience-Store Consolidation Looms

Historically fragmented industry will likely see lots of M&A in years ahead

The second-largest convenience-store owner in the U.S. wants to buy the largest. Whether or not the deal goes through, there will likely be many convenience-store mergers in the years ahead.

The industry is so fragmented in the U.S. that the 10 largest chains still hold less than a fifth of market share. In recent years, consolidation has been slow and steady, but that could be set to change.

Single-store operators dominated in the early 2000s, and the share of those mom-and-pop stores rose through 2017 as oil majors sold off their gas stations, according to data from the National Association of Convenience Stores. Since then, however, the share of single-store operators has steadily declined as larger chain owners actively pursued mergers. Still, about 60% of convenience stores in the U.S. are currently mom-and-pop owned.

A gradual roll-up would surely be the most palatable path for antitrust authorities, but the second-largest convenience-store owner—Circle-K owner Alimentation Couche-Tard—wants to expedite the process by acquiring the top dog, 7-Eleven’s Japanese owner Seven & i 3382 -1.80%decrease; red down pointing triangle. So far, Seven & i has been unmoved by Couche-Tard’s bids: It rejected the initial offer for being too low and hasn’t yet accepted or rejected the second, sweetened deal. In an investor day last week, Seven & i outlined its stand-alone path to growth.

Even if combined, 7-Eleven and Couche-Tard’s market share wouldn’t be overwhelming at roughly 12%. Antitrust authorities are still likely to take a skeptical view of the deal, which involves the politically sensitive food and fuel categories. Around half of Circle-K stores have a 7-Eleven within a three-mile radius, according to Anthony Bonadio, equity analyst at Wells Fargo. The Federal Trade Commission already wasn’t happy with Seven & i’s acquisition of Speedway in 2021; the companies reached a settlement at the time and agreed to divest 293 stores, out of a combined total of around 13,000. 7-Eleven now has around 12,600 stores in the U.S.

M&A is central to convenience-store giants’ growth plans, partly because building gas stations from scratch involves a lot of extra permitting and time. Meanwhile, same-store revenue growth from fuel and food are tricky to achieve. Fuel is a low-margin business and a category that is set to decline over the long term. Food is more promising and comes with higher margins, but it is also an area where only a few chains have excelled—such as Casey’s General Stores with its pizza and privately owned Wawa with hoagies. This is an area where 7-Eleven might have an edge over Couche-Tard: It can draw on lessons from its wildly popular food business in Japan.

Seven & i said in its investor day last week that M&A would be pivotal to its growth strategy in the U.S.; the company has acquired more than 7,000 stores in the country since 2006. The company has about $10 billion of cash and has been willing to pay steep multiples on larger deals such as Speedway and Sunoco. Meanwhile, M&A is integral to Couche-Tard’s DNA: More than 70% of its stores stem from acquisitions. Couche-Tard has about $1.6 billion of cash, but has said it has capacity to spend $10 billion on purchases.

If Couche-Tard fails to bag Seven & i, the two giants are likely to each go on their own acquisition sprees. That would likely involve shelling out big premiums for larger chains, or else risk falling short of their growth targets. Outside of Couche-Tard and Seven & i, there are only six other convenience-store owners that operate more than 1,000 stores; these aren’t the types that will accept lowball offers. Seven & i says it wants to grow its revenue by nearly 70% through 2030. Couche-Tard has set a target of increasing its earnings before interest, taxes, depreciation and amortization by more than 70% through 2028.

For these chains, the road to growth is anything but convenient.