Good morning! President-elect Trump vowed an additional 10% tariff on China and 25% tariffs on Canada and Mexico. The stock and bond markets reacted positively to Trump’s pick of Bessent for Treasury Secretary. Deutsche Bank raised its S&P 500 price target to 7,000 by 2025, a 17% gain. UniCredit made an offer to acquire a rival Italian bank for €10 billion, and a Jaguar boss defended the company’s new 'woke' rebrand amid growing online backlash.

Plus, Starbucks is working to address its long lines at airports this Thanksgiving, and Citi is offering special bonuses to dozens of employees within its wealth division to keep them from leaving.

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_{SQUEEZ OF THE DAY}

Macy's Worker Hid $154 Million

Macy’s has found itself in hot water after discovering that a single employee managed to hide up to $154 million in expenses over nearly three years. 

The discovery forced the retailer to delay its quarterly earnings report and launch an independent investigation. The unnamed employee manipulated accounting entries to conceal small-package delivery costs. While the company asserts that vendor payments and cash flow weren’t impacted, the scale of the deception raises significant concerns about internal controls.

The fallout has rattled investors, who were already uneasy about Macy’s performance this year. Its stock is down nearly 20%, and analysts are questioning the competence of Macy’s auditors.

Adding to the retailer’s woes, quarterly sales dipped 2.4%, driven by weak digital performance and tepid demand for cold-weather products during an unusually warm fall. Macy’s efforts to revitalize its business, including planned store closures, have yet to show meaningful results.

The timing couldn’t be worse, as Macy’s heads into the critical holiday season under increased scrutiny. While higher-end brands like Bloomingdale’s and Bluemercury posted modest growth, they’re not enough to offset the broader decline.

Takeaway: Macy’s CEO Tony Spring reassured shareholders of the company’s dedication to ethical practices, but rebuilding trust after a $154 million slip-up will take more than just promises. The incident is a stark reminder that even large public companies can have FTX-like bust-ups when oversight fails. And as for the mystery employee behind this debacle—if they ever launch a course on stealth accounting, it might just outsell Macy’s Black Friday deals.

_{PRESENTED BY CARBON FINANCE}

Don’t Have $25K To Spend On High-End Market Tools?

We don’t blame you.

At this point, market insights are as valuable as gold. 

But here’s the challenge: The gap between Wall Street and everyday investors continues to grow, especially with the rise of AI.

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_HEADLINES

Top Reads

• Trump to put additional tariffs on China, Mexico and Canada (CNBC)

• Jaguar boss defends new 'woke' rebrand amid mounting online backlash (Fox)

• U.S. stock and bond markets love Trump’s pick of Bessent for Treasury (CNBC)

• What Trump's Treasury secretary has planned for the economy (Axios)

• Deutsche Bank sees the S&P 500 hitting 7,000 in 2025 (CNBC)

• UniCredit offers to buy rival Italian bank for €10 billion (Axios)

• Wall Street launches new ways to bet on bitcoin (CNBC)

• Starbucks' next test: Airport cafes (CNBC)

• Citi bonuses buy time for new wealth boss's revamp (YF) 

• Apollo, Citadel flag hidden costs of passive funds dominance (BB)

• Blackstone private credit fund taps market for $1.5 billion (YF)

• Tesla excluded from EV buyer credits in California proposal (YF)

• Tesla down as UBS says 'animal spirits' driving rally, not changes (YF)

_{CAPITAL PULSE}

Markets Rundown

Treasury Nominee Sparks Broad Market Gains: Wall Street began the week on a strong note as President-elect Trump’s nomination of Scott Bessent for Treasury secretary bolstered investor optimism. Known as a deficit hawk, Bessent’s nomination pushed Treasury yields to one-month lows, lifting cyclical stocks such as homebuilders, retailers, and transport leaders like Union Pacific (UNP) and FedEx (FDX).

The Dow hit a record high, and small-cap stocks rallied amid hopes for domestic economic growth. In contrast, tech stocks lagged as Tesla (TSLA) and Nvidia (NVDA) fell on profit-taking. Bath & Body Works (BBWI) surged 16% after raising its full-year guidance, while Macy’s (M) slid over 2% after delaying its earnings report due to internal investigations.

Bond Market Sees Strong Demand: The 10-year Treasury yield dropped 15 basis points to 4.27%, driven by robust demand at a $69 billion 2-year note auction. Lower yields supported rate-sensitive sectors like real estate and consumer discretionary, though markets reduced the likelihood of a December Fed rate cut to around 52.5%.

Market Rotation Signals Broadening Rally: The S&P 500 Equal Weight Index outperformed the market-cap-weighted S&P 500, reflecting a shift toward smaller and cyclical stocks and away from mega-cap tech names such as Alphabet (GOOGL) and Amazon (AMZN), which face regulatory scrutiny and valuation challenges.

Economic and Policy Drivers: Investors remain focused on critical upcoming data. Consumer Confidence, due Tuesday, is expected to rise to 113.0, reflecting stronger sentiment.

New Home Sales are projected to dip slightly to 718,000 units, while Fed Minutes, also on Tuesday, could shed light on inflation discussions and fiscal policy considerations. The PCE Inflation report on Wednesday is anticipated to show core inflation climbing to 2.8% year-over-year, potentially complicating the Federal Reserve’s rate-cut plans.

Looking Ahead: The rally’s broadening base underscores confidence in economic resilience, even as inflation data and employment trends remain pivotal to the Fed’s next steps. Falling yields and expanding market participation suggest optimism as the year approaches its close.

Movers & Shakers

• (+) Bath & Body Works ($BBWI) +17% after raising its forecast for full-year adjusted profit.

• (+) Robinhood ($HOOD) +3% after Morgan Stanley upgraded the fintech company.

• (–) Tesla ($TSLA) -4% after a downgrade by UBS; exclusion from California EV credits.

Private Dealmaking

• Italy's Bending Spoons to take Brightcove private for $233 million 

• Adcendo, a cancer treatment developer, raised $135 million

• Halycon, a cybersecurity startup, raised $100 million

• Nivoda, an online jewelry marketplace, raised $51 million

• Lightning AI, an AI dev tools provider, raised $50 million

• Pyramid Analytics, a decision intelligence company, raised $50 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

Buffett’s Early Investments

Buffett's Early Investments explores the formative years of Warren Buffett's illustrious career by analyzing ten key investments that defined his approach to value investing in the 1950s and 1960s.

These early ventures, rooted in careful analysis and bold decision-making, earned Buffett his first millions and established the foundation for his legendary status. The book uses the original documents Buffett relied upon, offering readers a rare insight into his thought process and the challenges he faced.

The narrative highlights Buffett’s largest investment in 1954, Philadelphia and Reading, a struggling coal company that was transformed into a thriving conglomerate under the guidance of his mentor, Ben Graham, ultimately achieving a twentyfold increase in stock value.

It also delves into Buffett’s early collaboration with Charlie Munger in their first formal investment together, the department store Hochschild-Kohn, marking the beginning of a long and fruitful partnership. Furthermore, the book examines Buffett’s 1966 investment in Walt Disney, shedding light on the corporate governance issues that posed significant risks and tested his resolve.

Through detailed storytelling and insightful analysis, Buffett’s Early Investments uncovers the strategies and principles that shaped Buffett’s early successes, offering timeless lessons for investors seeking to emulate his approach.

“Price is what you pay. Value is what you get.”

_{DAILY VISUAL}

Stocks Are Expensive

_{PRESENTED BY GELT}

Stop Overpaying Taxes and Start Saving Big in 2025

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Make this year the one where you keep more of what you earn. Schedule a free tax review and let Gelt create a custom plan for you.

_{DAILY ACUMEN}

Liquidity

Most people think about maximizing returns, but they often ignore the importance of liquidity—having enough cash or easily sellable assets when things go south.

Liquidity doesn’t matter much when markets are stable. But when volatility hits, liquidity is everything.

During the 2008 financial crisis, some high-net-worth individuals lost everything not because they lacked assets but because they couldn’t convert those assets into cash when needed.

In moments of panic, illiquid assets like real estate, private equity, or even some stocks become impossible to offload without taking a massive hit.

It’s not just about having assets—it’s about being able to access money when you need it.

Liquidity buys you options, keeps you afloat in crises, and allows you to take advantage of market opportunities while others are forced to sell.

_{ENLIGHTENMENT}

Short Squeez Picks

• Skills to master at 40 that will set you up for life

• Things to never say when talking to your boss about a problem

• How to hand off work before a vacation

• How generative AI affects highly skilled workers

• How to be a strong leader without being a jerk

_{MEME-A-PALOOZA}

Memes of the Day