WSJ : Some Fear Factory Boom Could Suffer Under Trump

Some Fear Factory Boom Could Suffer Under Trump
Former president disparages U.S. clean energy, chip laws credited with fueling investment in manufacturing

WASHINGTON—In the past few years, the U.S. has experienced an epic factory building boom. That could be at risk, some analysts and Democrats say. The reason: former President Donald Trump’s opposition to the laws that helped make it possible.

Private fixed investment in manufacturing structures reached an annual pace of $236 billion in the third quarter, more than double the rate at the height of Trump’s presidency after accounting for inflation. The last period in which factory investment grew this fast was at the height of the space race in the 1960s.

Some of that boom appears to be linked to the Chips and Science Act, funneling $53 billion in subsidies and tax credits toward semiconductor manufacturing facilities, and the Inflation Reduction Act, authorizing hundreds of billion dollars in tax credits and loans toward low-carbon technologies. President Biden signed both into law in 2022.

“The charts for this metric are kind of crazy when you look at them,” said Oren Cass, founder of American Compass, a think tank that advocates for Republicans to take up populist economic policies. He said this shows industrial policy, whereby the government encourages strategic or favored economic sectors, can boost the supply side of the economy.

“The IRA and the Chips Act have been wildly successful, I think beyond even the Biden administration’s initial expectations,” said Ernie Tedeschi, an economist at the Yale Budget Lab who served as chief economist on Biden’s Council of Economic Advisers.

The Chips law aims to expand the U.S. base for producing semiconductors vital to countless products from cars to artificial intelligence systems and military hardware while reducing dependence on geopolitically sensitive Taiwan, South Korea and China. The IRA is meant to hasten the transition to low-carbon energy while bolstering domestic manufacturing of the supporting equipment such as electric vehicles and batteries.

But Trump has criticized the laws as giveaways.

“We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here, and they’re not going to give us the good companies anyway,” Trump said on Joe Rogan’s podcast on Oct. 26. “When I see us paying a lot of money to have people build chips, that’s not the way…You could have done it with a series of tariffs.”

In a September speech to the Economic Club of New York, he vowed to “rescind all unspent funds under the misnamed Inflation Reduction Act.” In a recent interview, John Paulson, a potential candidate for Treasury secretary in a Trump administration, said he would work with Elon Musk to scrap the IRA’s green-energy subsidies.

Trump has promised to deliver his own “manufacturing renaissance,” via lower taxes, regulations, and most of all, tariffs of 60% on imports from China and 10% to 20% on imports from everywhere else.

But economists surveyed by The Wall Street Journal predicted that if he is elected, Trump’s policies would lead to lower manufacturing employment than otherwise.

Democrats say Trump is putting manufacturing at risk. “Donald Trump is threatening to defund and dismantle thousands of manufacturing jobs across the country,” said Matt Corridoni, a spokesman for the Harris campaign.

A spokeswoman for the Trump campaign didn’t respond to a request for comment.

Whether Trump could or would cut funding is unclear. It is unlikely a future Trump administration could claw back grants or loans already paid out. Denying IRA tax credits would require a change to the law that could be difficult for Trump to secure even if Republicans control both Senate and the House of Representatives.

Industry leaders note the Chips Act received bipartisan support, while the IRA has led to so many projects in red states that 18 House Republicans signed a letter to Speaker Mike Johnson (R., La.) urging him not to repeal it. Cass said a future Trump administration is more likely to curb IRA spending than Chips grants, given the latter’s bipartisan support.

Johnson on Friday told a reporter that Republicans “probably will” try to repeal the Chips Act if they control Congress and the White House, in a video the Harris campaign promptly shared. He later clarified that the Chips Act was “not on the agenda for repeal” but that Republicans might seek to “further streamline and improve the primary purpose” of the legislation by eliminating regulatory and environmental provisions.

But Trump could potentially stop or delay money that has yet to be disbursed, Tedeschi said. Some administration officials and the Harris campaign warn this could disrupt planned projects.

The Commerce Department has announced preliminary terms totaling $36 billion toward chip facilities being built by companies including Samsung, Intel, Taiwan Semiconductor Manufacturing Co., GlobalFoundries, and Micron Technology. Only $123 million has reached the step of being awarded—a grant to Polar Semiconductor last month. Disbursement of funds is contingent on the recipients meeting certain benchmarks.

Intel Chief Executive Pat Gelsinger on Thursday expressed disappointment with the pace of negotiations to obtain billions of dollars Commerce has pledged to the chip maker’s factories. “We’ve taken that out of our financials this year” as a result, he said. “We’re anxious for that to be finished.”

The Biden administration didn’t provide a figure on how much had been spent under the IRA.

At the Thursday announcement of a new Chips-funded R&D center at the Albany Nanotech Complex in New York’s capital region, Senate Majority Leader Chuck Schumer (D., N.Y.), said the contract for the money “will be signed before December 31st. So, it’ll be done before whomever becomes president.”

At the same event New York’s Democratic Gov. Kathy Hochul, said, “This is important to our national security.” Undoing Chips is “basically saying, I want this to be done by our foreign adversaries. So, I believe that [Trump] will be persuaded that the right thing to do is to keep this in place.”

James Lewis, a technology expert at the Center for Strategic and International Studies, said Trump may not be able to undo the Chips Act, but could stop a hoped-for second round of funding. “That would be really damaging,” Lewis said, citing other countries’ competing incentives for semiconductor plants. “If we stop now, it’s a one-off and it won’t have a long-term effect.”

While Trump’s planned tariffs may help some domestic manufacturers compete against imports, economists say they will also drive up the cost of inputs that U.S. factories need to manufacture finished products, and spark retaliation from trading partners.

One such input is the advanced chip-making machines that the U.S. imports from Netherlands’ ASML Holding, considered essential to making the most advanced chips.

“A 20% tariff on that is definitely going to be noticeable to the semiconductor fab that wants to get up and running,” said Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace who served in the White House in 2021 and 2022.

TechCrunch : Quantum Machines and Nvidia use machine learning to get closer to a

Quick Resume :
Quantum Machines and Nvidia have collaborated to improve quantum computer calibration using machine learning. They successfully used reinforcement learning on Nvidia's DGX platform to better control qubits in a Rigetti quantum chip by continuously calibrating the π pulses. This constant calibration helps maintain high fidelity over time, which is crucial for quantum error correction. While this is a small step, it represents significant progress toward fault-tolerant quantum computing, and the companies plan to expand their collaboration with even more powerful computing platforms.


Full Article:
Quantum Machines and Nvidia use machine learning to get closer to an error-corrected quantum computer

About a year and a half ago, quantum control startup Quantum Machines and Nvidia announced a deep partnership that would bring together Nvidia’s DGX Quantum computing platform and Quantum Machine’s advanced quantum control hardware. We didn’t hear much about the results of this partnership for a while, but it’s now starting to bear fruit and getting the industry one step closer to the holy grail of an error-corrected quantum computer.

In a presentation earlier this year, the two companies showed that they are able to use an off-the-shelf reinforcement learning model running on Nvidia’s DGX platform to better control the qubits in a Rigetti quantum chip by keeping the system calibrated.

Yonatan Cohen, the co-founder and CTO of Quantum Machines, noted how his company has long sought to use general classical compute engines to control quantum processors. Those compute engines were small and limited, but that’s not a problem with Nvidia’s extremely powerful DGX platform. The holy grail, he said, is to run quantum error correction. We’re not there yet. Instead, this collaboration focused on calibration, and specifically calibrating the so-called “π pulses” that control the rotation of a qubit inside a quantum processor.

At first glance, calibration may seem like a one-shot problem: You calibrate the processor before you start running the algorithm on it. But it’s not that simple. “If you look at the performance of quantum computers today, you get some high fidelity,” Cohen said. “But then, the users, when they use the computer, it’s typically not at the best fidelity. It drifts all the time. If we can frequently recalibrate it using these kinds of techniques and underlying hardware, then we can improve the performance and keep the fidelity [high] over a long time, which is what’s going to be needed in quantum error correction.”

Constantly adjusting those pulses in near real time is an extremely compute-intensive task, but since a quantum system is always slightly different, it is also a control problem that lends itself to being solved with the help of reinforcement learning.

“As quantum computers are scaling up and improving, there are all these problems that become bottlenecks, that become really compute-intensive,” said Sam Stanwyck, Nvidia’s group product manager for quantum computing. “Quantum error correction is really a huge one. This is necessary to unlock fault-tolerant quantum computing, but also how to apply exactly the right control pulses to get the most out of the qubits”

Stanwyck also stressed that there was no system before DGX Quantum that would enable the kind of minimal latency necessary to perform these calculations.

As it turns out, even a small improvement in calibration can lead to massive improvements in error correction. “The return on investment in calibration in the context of quantum error correction is exponential,” explained Quantum Machines Product Manager Ramon Szmuk. “If you calibrate 10% better, that gives you an exponentially better logical error [performance] in the logical qubit that is composed of many physical qubits. So there’s a lot of motivation here to calibrate very well and fast.”

It’s worth stressing that this is just the start of this optimization process and collaboration. What the team actually did here was simply take a handful of off-the-shelf algorithms and look at which one worked best (TD3, in this case). All in all, the actual code for running the experiment was only about 150 lines long. Of course, this relies on all of the work the two teams also did to integrate the various systems and build out the software stack. For developers, though, all of that complexity can be hidden away, and the two companies expect to create more and more open source libraries over time to take advantage of this larger platform.

Szmuk stressed that for this project, the team only worked with a very basic quantum circuit but that it can be generalized to deep circuits as well. If you can do this with one gate and one qubit, you can also do it with a hundred qubits and 1,000 gates,” he said.

“I’d say the individual result is a small step, but it’s a small step towards solving the most important problems,” Stanwyck added. “Useful quantum computing is going to require the tight integration of accelerated supercomputing — and that may be the most difficult engineering challenge. So being able to do this for real on a quantum computer and tune up a pulse in a way that is not just optimized for a small quantum computer but is a scalable, modular platform, we think we’re really on the way to solving some of the most important problems in quantum computing with this.”

Stanwyck also said that the two companies plan to continue this collaboration and get these tools into the hands of more researchers. With Nvidia’s Blackwell chips becoming available next year, they’ll also have an even more powerful computing platform for this project, too.

>>> Weekend Papers Summary

FINANCIAL TIMES
-The US government has accused Russian influence actors of creating a viral video claiming to show a Haitian immigrant illegally voting for Kamala Harris in the presidential election. Intelligence agencies said the clip was part of Moscow's broader effort to raise unfounded questions about the US election's integrity and stoke divisions among Americans. They also claimed Russian actors had manufactured a video falsely accusing an individual associated with the Democratic presidential ticket of taking a bribe from a US entertainer. The warning comes as officials across the country brace for a stream of misinformation surrounding the election, coming from both within the US and foreign adversaries such as Russia, Iran, and China. Georgia's top election official, Brad Raffensperger, appealed to Elon Musk to remove "targeted disinformation" about voter fraud in the state from social media site X.
-Pennsylvania is the biggest prize in the White House race, with the fight fierce and expensive. Both Donald Trump and Donald Trump have invested hundreds of millions of dollars in the state and visited it more than any other battleground. Erie county is ground zero in this critical swing state, with recent elections suggesting winning here wins the presidency. With polling showing Trump and Harris in a virtual dead heat in the country and other swing states, a few votes in Erie could decide the next president. Erie hosted Trump's running mate, JD Vance, and Bernie Sanders, the progressive senator from Vermont, campaigning on behalf of the Democrats. Both parties are on the ground in force, with Democrats seeing revived organizing efforts as their path to victory in the county.
-Israeli security services have arrested several individuals as part of a probe into secret documents leaked to two foreign newspapers. The arrests were made public after Israeli newspapers partially lifted a gag order related to the investigation, claiming the leaks may have damaged Israel's war goals in the Gaza Strip. The investigation is ongoing, and one of the suspects is a press adviser to Netanyahu, not an employee of his office. Netanyahu's office stated that no one from the prime minister's office was investigated or arrested. The leaks to the UK-based Jewish Chronicle and Germany's Bild Zeitung cited documents found in Gaza that showed Hamas planned to divide Israeli society through propaganda efforts about the hostages.
-The dollar experienced its biggest monthly gain in over two years in October, driven by hopes that strong economic data and a victory for Donald Trump in the upcoming presidential election will lead to higher interest rates. The dollar's index against six other currencies, including the pound and Japan's yen, rose 3.2% in October, its best month since April 2022. The sharp rise in the dollar reflects persistent signs of economic resilience, including strong September payrolls data and higher consumer spending. Market participants also said increasing expectations of a Republican election victory bolstered the dollar's appeal. The latest polls put Trump and Kamala Harris virtually neck and neck, setting the stage for an extremely tight race on November 5.
-China is facing financial difficulties in retrofitting hundreds of thousands of lifts in ageing apartment blocks as its residents grow older. The move was made in the 1980s and 1990s to support China's manufacturing boom. However, these ageing migrants have found themselves on the wrong side of the property market downturn and worsening government fiscal health, leaving them unable to move into modern apartments and struggling to move around their own buildings. The housing regulator plans to install 2 million lifts across 8B m2 of housing stock built between 1980 and 2000. However, the lift installation campaign, first touted in 2018, has been plagued by conflict over who will pay, with authorities offering only partial subsidies and pushing tenants to cover the cost.
-UK Prime Minister Sir Keir Starmer has reassured markets that his government will not become addicted to tax and spend after the Budget, promising tough reforms to Britain's "creaking" state. Starmer defended his government's approach, stating that it cannot tax and spend to achieve prosperity, nor can it simply spend to improve public services. He emphasized that reform is an essential pillar of the government's agenda. Starmer and Chancellor Rachel Reeves are attempting to reassure markets, businesses, and voters that the £40B tax rise and £28B extra annual borrowing in the Budget are not the first of several such increases. The gilt market stabilized after two days of post-Budget turbulence, pushing long-term government borrowing costs near their highest level since 2008.
-Competitive mathematics may seem esoteric in a war-torn region where many young men dropped out of school before the conflict shut down educational institutions. Academic youngsters must balance their attempts to keep studying with evading heavy munitions, finding clean water, and navigating checkpoints. Since Hamas's attack on Israel last year, Israel's offensive in Gaza has killed over 43,000 people and left much of the strip in ruins. However, AlHajajla, who was a driving force behind Palestine competing in the Olympiad for the first time in 2022, is determined not to let the war keep young Palestinians from top-level academic success. He believes that creative, critical thinking is essential for problem-solving and building solutions and models that can be applied to anything.
-Donald Trump has criticized Republican critic Liz Cheney as a "radical war hawk" who should have "nine barrels shooting at her," prompting criticism from Democratic rival Kamala Harris's campaign. Trump made the comments at a campaign event with Tucker Carlson, a right-wing media host, with just days left before the US election next Tuesday. Harris's campaign accused Trump of "talking about sending a prominent Republican to the firing squad." Harris later stated that anyone who wants to be president of the United States, who uses such violent rhetoric, is clearly disqualified and unqualified to be president. Trump later tried to defuse the furore by stating that Cheney is a "dumb war hawk" and that her father has caused plenty of death and probably never even thought of it.
-The US economy saw only 12,000 new jobs in October, the weakest report of the Biden administration, due to hurricanes and the Boeing strike. The Trump campaign seized on the report, claiming it reveals the economic damage caused by Kamala Harris. President Biden said job growth is expected to rebound in November. October's labor market figure was below the average forecast of 100,000 job gains and well short of September's revised figure of 223,000 new jobs. However, the unemployment rate remained at 4.1%, indicating the underlying health of the US labor market. The Trump campaign criticized the report as a catastrophe and urged for continued hurricane recovery and rebuilding efforts.

NEW YORK TIMES
--Kamala Harris and Donald Trump gathered in Milwaukee during their final scheduled visits to Wisconsin, a battleground state where neither party has a lead and is considered essential to a Harris victory. With the election just three days away, Harris adopted an upbeat tone during an evening of musical performances and urged her supporters in Milwaukee, where early voting lags the balloting in other parts of the state. Trump, returning to the site of his Republican coronation in July, had an entirely different tone, employing fear-mongering language about immigration, repeating his 2020 election lies, and lobbed insults at his political foes. He also suggested that Milwaukee's Greek-born basketball star Giannis Antetokounmpo, who is Black, seemed less Greek than Trump did.
-Gen Z men are increasingly turning away from the Democratic Party due to the former president's bravado and irreverence. However, they do not usually vote in high numbers. Nick Kerkhoff, a football player and fraternity president at Carroll University, said that Trump's economic agenda and fear of Vice President Kamala Harris getting the country embroiled in a war that men would be drafted into led him to vote early for Trump. In June, Trump appeared on a podcast interview with Logan Paul, the wrestler and social media star, discussing immigration, the economy, boxing, and the existence of aliens. Finn Murphy, a 20-year-old college student in Carolina Beach, N.C., listened to snippets of the podcast and liked what he heard. He was standing in line last week alongside people three times his age to cast a vote for Trump.
-Nicolle Wallace, former White House communications director in George W. Bush's administration, has called on her former boss to denounce Trump. Wallace made the appeal on her MSNBC program, "Deadline: White House," stating that Trump's violent language about former Representative Liz Cheney has prompted her to publicly raise the question she gets asked more than any other off the set: "Where is George W. Bush?" Cheney, a former Wyoming congresswoman, has emerged as one of Trump's most prominent Republican critics and has campaigned extensively for his Democratic opponent, Kamala Harris. Her father, Dick Cheney, who served as Bush's vice president, has also said he would vote for Harris.
-The Supreme Court has rejected an appeal by Republicans to block the counting of provisional ballots by voters whose mail-in ballots were deemed invalid. The decision could affect thousands of mail-in ballots in Pennsylvania, a state crucial to each party's path to victory in the presidential contest. The decision, which was unsigned and gave no reasoning, was celebrated by Democrats as a victory in a crucial state. The latest polls show Vice President Kamala Harris and former President Donald J. Trump virtually tied. The ruling was one in a string of court victories for Democrats, whose voters are more likely to use mail ballots and were therefore more likely to have their votes tossed out if Republicans had succeeded in the case. Trump virtually tied.
-The White House has altered the official transcript of President Biden's remarks about the Trump campaign and "garbage" as it rushed to clarify that the president's words had been taken out of context. The debate over the meaning of Biden's words ultimately comes down to an apostrophe, which the White House press office inserted into the transcript without the authorization of the White House Stenography Office, the nonpartisan group that prepares the official record. The head of the stenography office said the alteration, first reported by The Associated Press, was a violation of protocol. It was also a sign of how seriously the White House took the uproar over the remarks, which drew waves of criticism from Republicans just days before a tossup election between Vice President Kamala Harris and former President Donald J. Trump.
-Ukrainian soldiers said that a Russian breakthrough outside the city of Toretsk in eastern Ukraine could have catastrophic consequences for their country's defense against the Kremlin's invasion. If they lose these positions, all units in Toretsk will be cut off from resupply and logistics because all the roads are behind them. The Ukrainians fight from fortified, dug-in bunkers, with few chances to move in the open, where Russian drones, some equipped with thermal night vision, can quickly kill them. Mines are hidden across land where soldiers might inch forward, if they could. Russian jets, artillery, and mortars wreak havoc from above.
-US intelligence agencies have issued a new warning on Russia's election misinformation campaign, citing two fabricated videos that falsely claimed Haitians illegally voted in Georgia and Vice President Kamala Harris and her husband received a $500,000 bribe from performer Sean Combs. The U.S. government issued a new warning on Friday, a week after blaming Russia for another video that falsely claimed that ballots in Pennsylvania were being destroyed. Officials say foreign powers are working to undermine faith in the election, and government agencies in charge of protecting the vote have said the current torrent of false claims is greater than before. A senior official from the Cybersecurity and Infrastructure Security Agency called it a "fire hose of disinformation." The U.S. government has been covering foreign efforts to influence the 2024 election.
-Israel has launched airstrikes near Beirut for the first time in several days, killing at least 52 people in central Lebanon, according to Lebanese authorities. Diplomatic efforts to reduce the fighting between Israel and Hezbollah have shown no sign of success. Negotiations to reach a temporary truce between Israel and Hamas, Hezbollah's ally in the Gaza Strip, also hit another impasse. Hamas appeared to rule out the possibility of a limited cease-fire in order to exchange hostages held in Gaza and Palestinian prisoners, according to a statement released through the group's official media. The Biden administration sent key envoys, including the CIA director, to the Middle East this week to generate momentum in talks to end Israel's war against Hamas in Gaza and its spiraling conflict with Hezbollah in Lebanon.
-As the death toll from the recent floods in Spain reaches 200, authorities are warning of new flooding in the southwest of the country. The Valencia region, which suffered the worst of the deluge, recorded 202 deaths, while three more people have died in neighboring regions, bringing the total of confirmed deaths to 205. The region that suffered the worst of the deluge, Valencia, recorded 202 deaths. The authorities are expecting the toll to rise as rescue workers continue to dig through sodden towns, clogged with mud and debris, making access extremely challenging. The authorities are also warning of new flooding in the southwest of the country. The situation is expected to worsen as rescue workers continue to dig through sodden towns, making access extremely challenging.
-Canadian authorities have dismantled the country's largest drug lab in British Columbia, seized enough chemicals and other material to produce around 96 million opioid doses. The lab is located in a rural part of the province and is the country's leading cause of overdose deaths. The police also found evidence of a drug production method used primarily by Mexican cartels to make opioids, which requires a particular precursor chemical and is often used to mass produce a potent synthetic drug known as "super meth." Experts suggest that Canadian drug dealers might be taking lessons from the cartels or that Mexican criminal groups might be operating in the country. Canadian authorities would not elaborate on potential links and said that the investigation that uncovered the drug lab was continuing.

NEW YORK POST
-The White House has announced a $425 million military aid package for Ukraine, aimed at assisting the country in its battle to maintain its sovereignty. The package includes air-defense interceptors, munitions for rocket systems and artillery, armored vehicles, and anti-tank weapons. The weapons, including surface-to-air missile system munitions and TOW and Javelin anti-tank missiles, are designed to help Ukraine fight from the air and ground in the eastern Donbas region. The package was announced after the Pentagon confirmed Ukrainian reports that North Korea has sent thousands of troops to Russia to bolster Moscow's invasion. Analysts suggest that North Korean dictator Kim Jong Un may want his forces to learn from a real-life ground war, something the Hermit Kingdom's military hasn't fought in seven decades. The Korean War has not technically ended, but large-scale combat between North and South Korea ended with an armistice agreed in 1953.
-Boeing has dismantled its global diversity, equity and inclusion (DEI) department as part of an overhaul of its operations ordered by the company's new top executive. The aerospace giant, which was criticized by tech mogul Elon Musk for prioritizing DEI over safety and quality controls after a near-catastrophic blowout during an Alaska Airlines flight, said staff from its DEI office would be absorbed into another human resources team focused on talent and employee experience. Sara Liang Bowen, a company vice president who was put in charge of the now-defunct DEI unit, left the company on Thursday. Bowen wrote in a farewell post on LinkedIn, expressing the privilege of his lifetime to lead Equity, Diversity, and Inclusion at Boeing and the team's efforts to support the evolving brilliance and creativity of the workforce. A conservative influencer who has launched viral campaigns that forced other high-profile companies to scrap their DEI policies took credit for Boeing's overhaul.

>>> Barron’s Weekend Summary

Cover:
-Walmart, the largest US company by revenue and employees, delivered $15.5B in profit last year and has a $663B market cap. Despite ongoing divisional elections, Walmart continues to grow, with its e-commerce, advertising, and membership businesses proving successful. CEO Doug McMillon, who will mark his 11th-year anniversary on Feb. 1, has seen Walmart stock climb 231% during McMillon's tenure. Walmart's success and importance to the economy and society make it a unique company in the corporate elites. The Walton family, descendants of founder Sam Walton, has a 46% stake in Walmart worth $300B, making them America's richest family. The Walton family's stewardship is one of Walmart's greatest advantages, with a singular symbiotic relationship that has almost no parallel in American business. The Walton family's fortune is spread among more than two dozen family members, with Sam's brother, James "Bud" Walton, having a smaller piece of the company.

Interview:
-Brian Gardner, Chief Washington Policy Strategist at Stifel SF, has been helping businesses and investors navigate the political landscape for decades. With the Nov. 5 presidential election approaching, Gardner's views are in greater demand than ever. He has been particularly prescient, suggesting that Vice President Kamala Harris would be the most likely replacement for President Joe Biden. Gardner also highlighted the potential tax debate in 2025-26, with the expiration of Trump tax cuts and other issues like clean-energy tax credits and corporate income tax. Both candidates have discussed changes, with Harris looking to raise the corporate tax rate and Trump discussing cutting it. Both candidates have big trade agendas, with Harris likely maintaining the status-quo situation with China tariffs, while Trump plans to increase tariffs on Chinese goods and expand global tariffs.

Tech Trader:
-Big Tech stocks have seen a mixed response to recent earnings reports, with Microsoft reporting stellar earnings and shares rising in after-hours trading. However, Chief Financial Officer Amy Hood warned that capital expenditures would continue to rise, leading to a 4% drop in shares. The week's results are expected to focus on the massive spending bills that companies continue to accumulate. Microsoft's capital expenditures were $20 billion in its fiscal first quarter, up 79% on the year and 203% over two years. The spending is primarily for the AI buildout in its rentable cloud computing platform, Azure. Azure cloud saw a 33% increase against last year, with 12 percentage points coming from AI services. However, this growth comes at a cost to profitability, as depreciation expenses pile up. Microsoft's shares fell 6% on the earnings news, erasing $194B in market value. Meta Platforms' results were similar, with shares falling despite the company's capex growing rapidly, up 36% on the year.

The Trader:
-Stocks have been struggling due to uncertainty surrounding an election and Federal Reserve meeting. The S&P 500 finished down 1% for the month in October, marking its worst performance since April and ending a five-month winning streak. October is the most volatile month, especially during election years, and the S&P 500 had been trending lower since mid-month. However, this year could end similarly, especially once election-related volatility has passed. DataTrek Research co-founder Nicholas Colas believes that when the Cboe Volatility Index (VIX) is one to two standard deviations above the long-run average, it's a good time for investors to buy stocks. 22V Research President Dennis DeBusschere agrees that the election is driving higher volatility but that backdrop isn't likely to continue. Choppiness was a factor pushing the S&P 500 lower on Thursday, and volatility is expected to remain intense through the next two weeks of market clearing events. Stockpickers may be able to swoop in, as BofA Securities' contrarian Sell Side Indicator is closer to a Sell signal than a Buy.
-The Technology Select Sector SPDR exchange-traded fund (XLK) has fallen 3.4% to $223, below its peak of $237 in July. Despite the drop, investors are turning to former favorites like Microsoft, Super Micro Computer, Amazon.com, and Apple. Microsoft's earnings were solid, but not enough for a stock trading at nearly 30 times earnings. Super Micro Computer's stock plunged almost 40% in just two days after revealing its auditor resigned over accounting concerns. Amazon.com's stock rose 5.2% after beating third-quarter earnings estimates, while Apple's stock was only down 0.4%. The 10-year Treasury yield is up 0.63 percentage points since the Federal Reserve cut interest rates on September 18, making future profits less valuable and putting downward pressure on valuations. The Tech ETF now trades at 28 times 12-month forward earnings, down from a peak of 31 in July. Tech sector profits are set to grow 18% annually over the next two years, boosted by sales growth and billions of dollars in share repurchases.

Features:
-Expectations have increased since Beijing's September effort to show focus on stabilizing the economy, following weak economic data and growing deflationary pressures. The iShares MSCI China exchange-traded fund has increased by 21% this year, but has fallen from its peak due to Beijing's slow action. Structural challenges facing the economy include turning around the property market and finding new sources of economic growth. Analysts expect authorities to continue on a slow path to stimulus, which could be disappointing to investors. The meeting of the National People's Congress Standing Committee is expected to run from Monday through Friday. Market expectations include six trillion renminbi ($874B) of bond issuances over three years and possibly another four trillion ($561B) in special local government bond issuance over five years. Optimists are also expecting authorities to inject one trillion renminbi into banks to deal with nonperforming debt related to the property sector or into a fiscal package aimed at bolstering consumption.
-Nvidia and Sherwin-Williams will join the Dow Jones Industrial Average (DJIA), replacing Intel and Dow before trading opened on November 8. The announcement was made after the close of trading on Friday. The changes were initiated to ensure a more representative exposure to the semiconductors industry and materials sector. The DJIA is a price-weighted index, meaning persistently lower-priced stocks have minimal impact on the index. Intel finished Friday at $23.20 and Dow at $49.97, with Dow's market capitalization around $35B. Nvidia is the second-largest company in the U.S. stock market in market value at $3.3T, just behind DJIA member Apple. Sherwin-Williams is a surprise addition to the DJIA, with a market value of $90B. The additions follow the addition of Amazon.com to the DJIA in February and Vistra will replace AES in the Dow Jones Utility Average.

European Trader:
-The US presidential election could determine whether the world is heading for an escalation in the trade war, potentially jeopardizing global economic growth and geopolitical alliances. Vice President Kamala Harris is expected to maintain the Biden administration's approach to China, which would involve continuing tariffs and increasing restrictions on China's access to critical technology. Former President Donald Trump's proposals would take the trade battle to a new level, potentially hitting allies like Germany and Australia. Trump has said he would raise tariffs on China to as much as 60% and impose universal tariffs on all imports of at least 10%. A major escalation in the trade war could create chaos in the trading system that underpins the global economy, causing initial rattle in international markets, especially China, Mexico, South Korea, and Europe. However, global markets do not yet fully reflect an intensified trade war and tariffs, as Trump could pursue these trade policies without Congress.

Emerging Markets:
-Emerging market bonds issued in dollars have held their own as global fixed income has sold off over the past month. However, local-currency bonds have not been as stable. Emerging markets have shifted towards issuing debt in their own currencies since the 1980s and '90s, making them more stable but leaving $7T in bonds extremely vulnerable to the US election on Nov. 5. Donald Trump's promised 10% tariffs on all imports to the US would push exporting countries to weaken their currencies in response, potentially cratering bonds priced in those currencies. However, more than $1T in emerging market debt issued in dollars has been issued in dollars. Spreads for this subasset class over U.S. Treasuries tightened by 0.23% in October. Riskier credits outperformed, with high-yield sovereigns tightening by 50 basis points as investors gained confidence in the solvency of onetime basket cases such as Argentina, Pakistan, and Sri Lanka.

Commodities:
-Oil prices rose following a report that Israel believes Iran is planning a strike in the coming days. Axios reported that Israeli intelligence suggests Iran could attack through Iraqi territory in retaliation for last month's missile barrage. The strike could happen within days and possibly ahead of the US election on Nov. 5. Crude prices jumped on Friday, with Brent rising 2.2% to $74.38 a barrel and West Texas Intermediate up 2.5% to $71.02 a barrel. Shares in oil supermajors also rose, with Chevron rising 4.1% after reporting better-than-expected Q3 earnings and revenue. Traders are worried that any attack by Tehran could prompt a counterstrike by Israel targeting Iranian oil production sites.

Streetwise:
-The demand for artificial-intelligence chips has driven the two best 10-year stock performers among current S&P 500 components, Nvidia and Advanced Micro Devices. Nvidia has returned 31,300%, while Advanced Micro Devices has returned 5,900%. The No. 3 and 4 performers are in businesses that produce artificial-intelligence chips, such as credit scores and lumber. Fair Isaac, a credit score company, has returned 3,300% over the past decade and Builders FirstSource, 2,900%. Both companies were added to the S&P 500 last year and report quarterly financial results in the week ahead. Fair Isaac benefits from being an industry standard, with some help from the government, and having a long runway to raise prices. The company was founded in the 1950s by engineer Bill Fair and mathematician Earl Isaac, and first introduced its credit score in 1989. Today, a FICO score judges creditworthiness on a scale from 300 to 850 using payment history, loan balances, and other data. Competition includes the three main credit bureaus, VantageScores, and an AI-powered lending marketplace called Upstart. Fair Isaac's FICO scores are required for loans that originate with government entities, such as the Federal Housing Administration and the Department of Veterans Affairs, as well as those bought or securitized by Fannie Mae and Freddie Mac. Today, more than 90% of top lenders use FICO scores, and barriers to entry are high. Fair Isaac uses AI transparently and has its own scoring products for borrowers with limited credit histories.

CrunchBase : The 10 Biggest Rounds Of October: OpenAI’s Massive Deal Dwarfs All

The 10 Biggest Rounds Of October: OpenAI’s Massive Deal Dwarfs All Others

OpenAI led the way last month and it really wasn’t even close. However, there were lots of other big raises — as a startup had to raise more than $200 million to make October’s list as investors were very willing to open their checkbooks for megadeals.

1. OpenAI, $6.6B, artificial intelligence: OpenAI announced its long-awaited raise of $6.6 billion at a post-money valuation of $157 billion led by Thrive Capital. The new round makes the ChatGPT creator one of the most valuable private companies in the world and also included investment from the likes of Altimeter Capital, Fidelity, Khosla Ventures, Microsoft, Nvidia, SoftBank and Abu Dhabi-based MGX. It also was reported SoftBank’s Vision Fund would invest $500 million in the round. The new round comes just as the company is facing myriad issues, including an exodus of higher-up employees and a restructuring change to switch it from a nonprofit to a for-profit benefit corporation and to give co-founder Sam Altman equity in the company. The funding structure seems to take those factors into account, as it came in the form of convertible notes and reportedly allows for investors to ask for their money back if the change is not completed within two years and removes the cap on returns for investors. The new round is bigger than the $6 billion round Elon Musk’s generative AI startup, xAI, officially announced in May, which up to this point was the largest round raised this year.

2. Pacific Fusion, $900M, energy: Another huge AI-related round. Pacific Fusion, a startup attempting to create a nuclear fusion-based energy source, raised more than $900 million in a Series A led by General Catalyst. The funding does depend on the company hitting certain milestones — which were not spelled out. The round further illustrates investors’ appetite for energy sources that can meet AI’s immense power needs.

3. (tied) Crusoe Energy Systems, $500M, energy: Back in 2022, the Denver-based company was helping power Bitcoin mining by harnessing natural gas that is typically burned during oil extraction and putting it toward powering the data centers needed for mining — raising a $350 million Series C equity round led by G2 Venture Partners, at $1.75 billion valuation in the process. Well, Crusoe has now turned its energy to AI — literally. The company is a so-called “neocloud” — a data center firm providing outsourced cloud computing for those looking to build AI. That business plan was enough for Crusoe to reportedly lock up a $500 million round led by Founders Fund at a $3 billion valuation. Founded in 2018, the company has raised $1.2 billion, per Crunchbase.

3. (tied) Poolside, $500M, artificial intelligence: Poolside closed a $500 million Series B led by Bain Capital Ventures. The new round valued the startup at $3 billion, Bloomberg reported. The startup builds artificial intelligence software for programmers. Poolside is just one of a handful of big deals recently in the AI coding space. In August, San Francisco-based Magic, which also develops AI models to write software, raised a $320 million round, and AI-powered coding assistant Codeium closed a $150 million Series C. Poolside has raised $626 million since being founded in May 2023.

3. (tied) X-energy, $500M, energy: Rockville, Maryland-based X-energy raised a Series C-1 of approximately $500 million, anchored by Amazon. The company is developing advanced small modular nuclear reactors for clean energy generation. Amazon and X-energy are collaborating to bring more than 5 gigawatts of new power projects online across the United States by 2039. Founded in 2009, X-energy has raised more than $785 million, per Crunchbase.

3. (tied) Insider, $500M, digital marketing: Marketing tech platform Insider raised a $500 million Series E led by General Atlantic to fund its expansion in the U.S. and AI product development. The latest funding comes about 18 months after a round last year that valued it at $1.9 billion. The New York-based company declined to disclose its valuation with the latest round. Insider, which was co-founded in Istanbul in 2012, has now raised $772.1 million from investors, per Crunchbase. The company said it operates in 28 countries around the world and counts big names such as Nike, Samsung, L’Oreal, Unilever, Allianz and Walt Disney among its customers.

7. Form Energy, $405M, renewable energy: Form Energy, a renewable energy company developing and commercializing multiday energy storage systems, raised a $405 million Series F led by T. Rowe Price. Long-duration energy storage has proven to be a tough nut to crack, but Form has been able to get some commercial traction as it looks to ramp up manufacturing operations and commercial deployments of its iron-air battery systems. The Somerville, Massachusetts-based company, founded in 2017, has raised a total of $1.5 billion in a mix of equity and grants, per Crunchbase.

8. (tied) Kailera Therapeutics, $400M, biotech: Yet another big biotech raise last month, as Kailera Therapeutics announced its launch with a $400 million Series A financing co-led by Atlas Venture, Bain Capital Life Sciences and RTW Investments. The new Boston-based company is developing several clinical-stage injectable and oral therapies to help with chronic weight management.

8. (tied) Lightmatter, $400M, data centers: Lightmatter, a startup that uses light to link chips together and to do calculations for the deep learning necessary for AI, locked up a $400 million Series D led by new investor T. Rowe Price at a $4.4 billion valuation. The new round nearly quadruples its previous valuation of $1.2 billion in December after a $155 million raise led by GV — which along with Fidelity Management and Research Co. also participated in the new round. As Big Tech pours hundreds of billions of dollars into new AI data centers, Lightmatter is trying to solve the problems around energy consumption and scalability of those new centers. The company’s tech uses silicon photonics that can speed up processes while also using less power. Although the idea of using light in computing isn’t new, creating the components has historically been challenging. Founded in 2017, Lightmatter has raised $850 million, per the company. Lightmatter’s was not the only large raise by a photonic startup last month. Xscape Photonics — a New York-based startup also using photonics technology to address the energy, performance and scalability challenges of AI data centers — raised a $44 million Series A led by IAG Capital Partners with investment from the likes of Cisco Investments and Nvidia.

10. Splitero, $300M, fintech: Part of the beauty of being a homeowner is having equity in that home. Unfortunately, accessing that equity can sometimes be burdensome. San Diego-based Splitero offers homeowners another option to do just that and last month the startup locked up $300 million through a strategic investment from funds managed by Antarctica Capital to further that mission. Splitero offers homeowners a lump sum of cash in exchange for a share of their home’s future value. Founded in 2021, the company has raised nearly $318 million, per Crunchbase.

CrunchBase : The Week’s 10 Biggest Funding Rounds: Crusoe Energy, Insider And Bi

The Week’s 10 Biggest Funding Rounds: Crusoe Energy, Insider And Biotech Raise Big

There may not have been a $1 billion raise this week, but large money deals did abound. Two U.S. startups raised half a billion dollars apiece, and another eight raised $100 million or more, with industries from cybersecurity to biotech to AI represented.

1. (tied) Crusoe Energy Systems, $500M, energy: This is not the first time Crusoe has made this list. Back in 2022, the Denver-based company was helping power Bitcoin mining by harnessing natural gas that is typically burned during oil extraction and putting it toward powering the data centers needed for mining — raising a $350 million Series C equity round led by G2 Venture Partners, at a $1.75 billion valuation in the process. Well, Crusoe has now turned its energy to AI — literally. The company is a so-called “neocloud” — a data center firm providing outsourced cloud computing for those looking to build AI. That business plan was enough for Crusoe to reportedly lock up a $500 million round led by Founders Fund at a $3 billion valuation. Founded in 2018, the company has raised $1.2 billion, per Crunchbase.

1. (tied) Insider, $500M, digital marketing: Marketing tech platform Insider raised a $500 million Series E led by General Atlantic to fund its expansion in the U.S. and AI product development. The latest funding comes about 18 months after a round last year that valued it at $1.9 billion. The New York-based company declined to disclose its valuation with the latest round. Insider, which was co-founded in Istanbul in 2012, has now raised $772.1 million from investors, per Crunchbase. The company says it operates in 28 countries around the world and counts big names such as Nike, Samsung, L’Oreal, Unilever, Allianz and Disney among its customers.

3. Beta Technologies, $318M, aerospace: If you’re one of those people frustrated that the technology revolution has not yet delivered us the flying cars we were promised, take heart: Startups working on vertical-takeoff aircraft continue to get investor interest. The latest startup in the space to get a big chunk of cash is Beta Technologies, maker of electric vertical take-off and landing planes. The South Burlington, Vermont-based startup this week announced a Series C led by Qatar Investment Authority, Qatar’s sovereign wealth fund. Fidelity, TPG Rise Climate Fund and United Therapeutics also joined as investors. The company — which has now raised $1.4 billion from investors, per Crunchbase — said the fresh cash will be used to move its aircraft closer to certification and commercialization.

4. Armis Security, $200M, cybersecurity: Cybersecurity startup Armis Security closed a $200 million Series D led by Alkeon Capital and General Catalyst. The round boosts the company’s valuation nearly 25% to $4.2 billion. The San Francisco-based startup last raised a $300 million private equity round in 2021 led by One Equity Partners at a $3.4 billion valuation. The new cash comes just after Armis said it had surpassed $200 million in annual recurring revenue — growing ARR by an additional $100 million in less than 18 months. The company is targeting an IPO in 2026, per Bloomberg. In 2020, Insight Partners bought a large stake in the startup. Armis is one of a handful of companies that plays in the industrial security — also called operational technology security — and IoT security spaces. The sector typically sees an ebb-and-flow of investment interest, but 2024 has been good for startups in the sector. Earlier this year, New York-based Claroty secured $100 million in strategic debt/credit financing led by Delta-v Capital, and San Francisco-based Nozomi Networks locked up a $100 million Series E from investors including Mitsubishi Electric and Schneider Electric.

5. Sierra, $175M, artificial intelligence: If you want to have your company’s valuation skyrocket in the blink of an eye, start an AI startup. Ex-Salesforce co-CEO Bret Taylor’s conversational AI startup Sierra raised $175 million this week in a funding round led by Greenoaks Capital that gave it a $4.5 billion valuation. It was just in February when the San Francisco-based company raised $110 million led by Sequoia Capital and Benchmark at a reported valuation of nearly $1 billion. A 4.5x increase in value in eight months time is not too shabby. And yes, Taylor also is chairman of the board at OpenAI — whose large language models Sierra uses — although he has said there are no conflicts of interest.

6. Melio, $150M, fintech: Payments platform Melio raised a $150 million Series E led by Fiserv at a $2 billion valuation. The New York-based company last raised cash in 2021 at a $4 billion valuation, but a reported sale of the company fell through last year at half that value. Founded in 2018, the company has raised $654 million, per Crunchbase.

7. (tied) Axonis Therapeutics, $115M, biotech: Boston-based Axonis Therapeutics, a biotech startup developing neuromedicines, locked up a $115 million Series A co-led by Cormorant Asset Management and venBio Partners. Founded in 2020, the company has raised nearly $130 million, per Crunchbase.

7. (tied) Evommune, $115M, biotech: Palo Alto, California-based Evommune, a biotech startup developing new ways to treat immune-mediated inflammatory diseases, completed a $115 million Series C co-led by new investors RA Capital Management and Sectoral Asset Management. Founded in 2020, the company has raised $268 million, per Crunchbase.

7. (tied) Fingercheck, $115M, human resources: Small business payroll and human resource software company Fingercheck raised a $115 million growth investment led by Edison Partners. Fingercheck’s platform allows payroll and HR management to be set up in hours and supports posting jobs, onboarding, payroll, scheduling and shift management, and more. The round is impressive considering the precipitous fall in funding to HR startups in recent years. During the height of the venture market in 2021, few sectors seemed to benefit as much as human resources — likely due to the fact businesses were undergoing major changes in the way they handled employees due to the pandemic. In 2021, HR startups raised more than $10.5 billion in over 900 rounds, per Crunchbase data. In 2023, those numbers fell to $7.8 billion in more than 800 rounds, and then dropped to only $2.9 billion in 500 rounds last year. So far this year, HR startups have seen only $1.7 billion in fewer than 300 rounds, per Crunchbase data. In fact, Fingercheck’s round is only the fourth raise in 2024 of $100 million or more in the sector.

10. DoorLoop, $100M, property management: Miami-based DoorLoop, a property management software company, raised a $100 million Series B funding led by JMI Equity. Founded in 2019, the company has raised $130 million, per Crunchbase.



Big global deals
The biggest deal of the week came from China.
  • GDS International, a developer and operator of data centers, raised $1 billion from institutional private-equity investors.

FT : Boeing sets milestone with colossal equity issue

Boeing sets milestone with colossal equity issue
Bold action signals aerospace giant is trying to take risk of financial distress off the table

In the third season of Breaking Bad, Mike Ehrmentraut warns Walter White: “No more half-measures, Walter.” When you’re on a knife’s edge, you need to take decisive action.

Boeing’s management team seems to have taken that advice to heart, pulling off one of the boldest financial recovery manoeuvres in recent corporate history. On Monday, the beleaguered aerospace group went all-in with a humongous offering of shares and equity-linked instruments to shore up its balance sheet and stave off a credit rating downgrade to junk status.

This was no small ask. Market analysts had expected Boeing to tap the markets for $10bn-$15bn, but the company raised an eye-watering $24.3bn, following the exercise by the underwriters of the “greenshoe” option to increase the offering by an additional 15 per cent. Boeing has thus set a record for the largest ever US equity offering. The stock offering was priced at $143 per share, a roughly 5 per cent discount to Monday’s close — a reasonable level given the circumstances.

What’s perhaps most remarkable, though, is the market’s reaction. You’d think this level of shareholder dilution — where existing shares lose value due to a flood of new stock — would send the stock price plummeting. But Boeing’s shares took only a small hit, dropping a mere 2 per cent on the placement day. The shares have subsequently rallied to around $150, about 5 per cent above the placement price and giving the company a market capitalisation of $95bn. 

Part of the reason is that investors had already baked a large equity offering into their expectations. But the market is also giving Boeing a nod of approval for this move. By raising such a massive amount, Boeing is trying to take the risk of financial distress off the table. Avoiding a ratings downgrade is crucial, as losing investment-grade status would hamper Boeing’s ability to raise debt, unsettle suppliers and customers, and potentially damage core industrial operations. It sounds paradoxical but a hugely dilutive offering can cause the stock price to re-rate upwards by alleviating concerns over financial wherewithal.

In that context, it is telling that after a strong investor response on Monday morning, Boeing decided to upsize the common stock tranche by 25 per cent instead of pushing to maximise the offer price. In other words, management prioritised putting to rest any concerns about its financial health over squeezing out the last dollar on price. Boeing wasn’t trying to drive a hard bargain, but rather was determined first and foremost to bolster its battered balance sheet — even if it meant leaving some money on the table for investors.

And Boeing’s timing also speaks volumes: this offering came right before the US presidential election and amid an unresolved machinists’ strike, signalling confidence that neither would derail its recovery plan. For Boeing there was no better time than now to start rehab. And no one wants half of the world’s duopoly in aircraft manufacturing to collapse.

An intriguing twist to the deal is the $5bn three-year “mandatory convertible” bond, a hybrid security that converts into shares on maturity. Rating agencies treat these as (mostly) equity. Boeing’s common stock pays no dividends, but the mandatory instrument yields 6 per cent, appealing to equity-linked fund managers and thus diversifying the investor pool for the deal. The positive market response enabled the underwriters to skew allocations in favour of “outright” investors keen for exposure to Boeing’s stock price over arbitrageurs, who typically profit by shorting the stock while holding the convertible. As a result, pressure on the Boeing stock price was minimised during the offering.

Boeing’s choice of equity underwriters was also strategic, aiming to foster a supportive stable of relationship banks. The four leads — Goldman Sachs, Bank of America, Citigroup and JPMorgan — had arranged a $10bn bridge credit facility earlier this month. Although US regulations prohibit banks from “tying” a loan commitment to an investment banking role, Boeing rewarded the four arrangers by granting them the equity mandate, which should yield each bank more than $75mn in fees. This contrasts with National Grid’s decision to allocate the full £140mn in underwriting fees for its £7bn share offering solely to its two corporate brokers, thereby excluding its other relationship lenders.

In short, the Boeing record-breaking offering is a recognition by the company that a fortress balance sheet is a precondition for its turnaround. The big question, of course, is whether this colossal equity deal will pay off in the long run. While not a quick fix, the capital raise represents a bold, strategic choice — and a recognition by Boeing’s management that there’s no more time for half-measures.

FT : How the US election may unsettle Europe

How the US election may unsettle Europe
Europeans mostly prefer Harris to Trump but challenges lie ahead on democracy, defence and economics

Democracy in peril?
The contest between Kamala Harris and Donald Trump makes Europeans nervous for at least three reasons: democracy, defence and economics.

Let’s take democracy first.

In the latest edition of its annual report on freedom around the world, the non-partisan, US-based group Freedom House said that political rights and civil liberties had deteriorated in 52 countries last year, while only 21 countries had registered improvements.

Its conclusion was that global freedom had declined in 2023 for the 18th consecutive year.


Then the organisation linked these findings to Tuesday’s US elections:

As it has for decades, the US can play a vital role in the expansion of global freedom.

But much depends on whether the November 2024 presidential election reinforces or weakens America’s democratic values, processes and institutions, along with its will to uphold the cause of democracy around the world.

Writing for Social Europe, Harold James, a Princeton University historian, makes a similar point:

No one knows how the US presidential election will turn out. One possibility is that the Trump bubble will finally burst, allowing for a return to normalcy in America and around the world.

But it is also possible that the United States will lurch toward a radical militarised authoritarianism that would establish a new norm for despots elsewhere.

This is Europe’s most profound concern. If democracy were to stumble in its US stronghold, it would stimulate illiberal or extremist political forces that are already active — in some countries, even in or close to government — in Europe.

It would also make European democracies more isolated and vulnerable in a world where dictatorships and semi-authoritarian regimes are contemptuous of liberal norms and act aggressively to discredit them.

Defending Europe
Europe’s second worry is defence and security.

Many Europeans lose sleep at night at the prospect that Trump might act or speak in ways that would shatter the credibility of the US security guarantee of Europe, expressed through Nato and the nuclear umbrella.

European supporters of Ukraine also worry that he might try to settle the war there on terms that amounted, in effect, to a victory for Vladimir Putin’s Russia.

Some politicians recognise that, in certain respects, Europe has only itself to blame. Many governments have spent too little on defence for far too long (though military budgets are rising), and a united EU foreign policy is more an aspiration than a reality.

In this piece for Project Syndicate, Friedrich Merz, leader of Germany’s opposition Christian Democrats, laments what he calls “the desolate state of European foreign and security policy at a critical moment”.

Most Europeans would certainly feel more comfortable with Harris in the White House, as is shown by surveys such as this one by the Savanta data and market research company.

In six countries polled — France, Germany, Italy, the Netherlands, Poland and Spain — clear majorities thought Harris would be better for Europe’s security.

Change things so things stay the same
However, that is not the whole story — as is made clear in an impressive collection of commentaries issued by the US Council on Foreign Relations and associated think-tanks.

For instance, Patrycja Sasnal of the Polish Institute of International Affairs writes:

Harris as president [would epitomise] a generational change in American politics that [would mean] shifts and challenges for Europe, too.

. . . with US President Joe Biden we bid farewell to post-cold war politicians, viscerally connected with European countries for better or worse, who have regarded the transatlantic partnership with a semi-religious dogma.

With Harris, Europe [would] have to embrace a new United States, more West coast, deeply connected to Asia and Latin America, perhaps at the expense of the partnership with Europe.

We can learn something about how a Harris administration might act on the international stage by considering the career and outlook of Philip Gordon, her chief foreign policy adviser.

Writing for the Washington-based Center for European Policy Analysis, Samuel Dempsey says:

Gordon . . . has broad expertise in Europe, is firmly behind Ukraine, but has advocated for a European Nato that pays its way.

Europeans hoping that a Harris administration might return to the good old days where the US pays a lot and asks little in return will likely be disappointed.

In other words, whoever wins the presidency, Europe will have to get its act together if it wants to preserve its freedom and, one hopes, remain allied with the US.

Economic threats
A third concern for Europe is trade and the economy.

At a rally in Pennsylvania this week, Trump could hardly have sounded more menacing about what lies in store for the EU on the trade front, if he should return to the White House:

I’ll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together …

They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price.

The prospect of a Trump victory, followed by punitive US tariffs on European goods, is hurting the share prices of export-sensitive companies such as Diageo, LVMH and Volkswagen, the FT reported this week.

For sure, the EU has been working on a response. As my colleague Henry Foy wrote:

The [European Commission], which manages trade policy, has already drafted a strategy to offer Trump a quick deal on increasing US [exports] to the EU and only resort to targeted retaliation if he opts for punitive tariffs.

Not much better with Harris?
But the broader picture is that Europe has been falling behind the US — and, to some extent, China — in the technologies of the future (see the chart below).