Tariffs on Coffee and Consumer Substitutions

https://finance.yahoo.com/news/us-coffee-prices-spike-due-203207154.html

How much are you willing to pay for coffee? To what extent can business owners continue profiting on this non-essential good in spite of tariffs? Unfortunately, tariffs on Brazil, Colombia, Vietnam have contributed to an astonishing annual 19% increase in instant coffee since September 2024. According to the article, 99% of coffee is imported to the United States. Trump commented that some "unavailable natural resources” may be exempt from the tariffs, but coffee has not been brought to discussion. 

Many manufacturing companies that are relocating to the U.S. have the ability to produce, regardless of climate. The contrary can be said about coffee bean manufactures, as the plants only thrive in a naturally warm and humid environment. Therefore, the cafe business is not as agile. Consumer prices are rising, reflected in the most recent CPI release. The CPI lacks substitution data, which could be prevalent in this situation. Consumers may substitute with other sources of caffeine, like energy drinks. Consequently, inflation data derived from the CPI may underestimate real behavioral changes in consumer spending. 

Target’s Job Cuts and the Future of Corporate Work

Target recently announced plans to cut 1,800 corporate jobs, showing how even major companies are reorganizing to stay competitive. Incoming CEO Michael Fiddelke said the company had “too many layers and overlapping work,” which slowed decisions. Target claims the cuts aren’t about saving money but about improving efficiency. But it’ll be interesting to see if that’s really the case, especially given their profit declines over the past year. After a rough 2024, this move appears aimed at rebuilding confidence and positioning the company for a stronger future.

Still, these layoffs highlight a bigger trend in today’s economy. Companies want to appear “leaner” and more tech driven, but that often means fewer people doing more work. If this push toward automation keeps growing, it could reshape not only what corporate jobs look like but also how many exist in the years ahead.

Read the article here: https://www.nytimes.com/2025/10/23/business/target-job-cuts.html

Rare earths make gains amid battle to beat China’s dominance

Rare-earth minerals are gaining increased attention as the United States steps up efforts to reduce its dependence on China’s dominance in the market for these critical resources, which are essential for technologies like electric vehicles, semiconductors, and defense systems. China currently controls a major share of global production and reserves of rare earths, prompting U.S.-listed companies in the supply chain, such as MP Materials and USA Rare Earth, to see their shares rise amid expectations of increased investment and government support. Meanwhile, China has tightened export controls, requiring foreign firms to obtain government approval for products containing Chinese-origin rare earths, further spurring U.S. and allied nations to accelerate domestic and allied-based sourcing and refining capacity. The article highlights how this shift reflects broader strategic concerns about supply chain security and technological sovereignty.

https://www.cnbc.com/2025/10/20/rare-earths-gain-amid-us-effort-to-beat-chinas-dominance.html

Wall Street and Lending Problems

 It seems Wall Street has begun to ge a little jumpy lately, and most likely for good reason. There have been a few recent lending blowups and investors believe there is more to follow. There have been some banks (Western Alliance and Zions) who are currently dealing with bad loans and the interest rates are climbing. And to add to this, banks are still dealing with hundreds of billions of lost dollars on old investments.

Private Lenders are also feeling the nerves as they have taken loans that could be risky and these rising interest rates are going to make it hard for borrowers to pay up. Unrealized losses are also at a whopping $395 billion so there is definitely fair reason for Wall Street to be nervous. There are fears that there could be more to come with these problems and it might not be over yet.

https://www.economist.com/finance-and-economics/2025/10/19/why-wall-street-is-fearful-of-more-lending-blow-ups

A soaring stock market led by tech has some likening the AI boom to the dot-com bubble

 The current surge in stock market valuations driven by enthusiasm over AI have analysts drawing  parallels between this AI boom and the late‑1990s dot‑com bubble. Tech companies with strong AI exposure are on the rise, pushing major indices to record highs. Some economists and global institutions  warn that although the AI‑investment wave may be real, the productivity gains underpinning the hype are still largely speculative. While the AI boom has rea traction, it may be carrying speculative excess, and investors should be aware of the risks of a bubble‑type event. I think think the hype is going to get ahead of the results. 

Europe’s Economy Struggles to Gain Momentum

 Europe’s economy is growing, but just barely. The European Commission expects around 1% growth in 2025 as high interest rates, weak exports, and global trade tensions slow things down. Inflation has finally dropped to about 2%, hitting the European Central Bank’s target, which is a positive sign after years of price spikes. Still, a stronger euro and new U.S. tariffs are hurting Europe’s exporters, especially in Germany and Italy. On the bright side, unemployment remains low, and wages are rising slightly. But long-term challenges like an aging population, low productivity, and the impact of climate change are weighing on the region’s future. This summer’s heat waves and droughts, for example, caused major agricultural and energy losses. Overall, Europe’s economy is stable but stuck in low gear. Inflation is under control, but growth and investment need a boost if the region wants to move from recovery to real progress.

https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/economic-forecasts/spring-2025-economic-forecast-moderate-growth-amid-global-economic-uncertainty_en?utm_source=chatgpt.com