Trump Will Pounce on Jobs Data. Why It’s a Crunch Moment for the Fed.

(Alex Wong/Getty Images)

In his cameo role in Home Alone 2 President Donald Trump famously gave directions to Macaulay Culkin’s Kevin. Now he’s looking to do the same for another Kevin—the next Federal Reserve chair, likely to be either Kevin Hassett or Kevin Warsh. That “advice” could make it tricky to forecast interest rates amid a flurry of economic data this week.

Whether Trump chooses economic adviser Hassett or former Fed governor Warsh might not seem to present a great difference. Both are broadly old-school Republicans with previous Fed experience. But the key factor will be who is more amenable to the rate cuts the White House wants—with Trump personally conducting interviews, according to The Wall Street Journal.

Interest rates next year should be lowered to 1%—or maybe lower—in Trump’s view. That’s far beyond what the market is forecasting according to the CME FedWatch tool and the one quarter-point cut penciled in by the majority of Fed policymakers.

Will this week’s economic releases clear up the confusion? The focus is on Tuesday’s employment reports, with data for both October and November coming in at the same time. Current Fed Chair Jerome Powell emphasized the risks to the labor market in the decision to reduce rates last week, meaning payroll figures will likely overshadow inflation data due Thursday.

While the immediate focus will be on whether the data change the probability of a rate cut in January—currently seen as unlikely—markets will also have half an eye on what they mean for Powell’s replacement from May next year. While the new chair will only hold one vote, their voice might be able to sway an increasingly divided committee. And the president will no doubt make his views known about the job figures as he presents the case for his economic policies.

Assuming one of the Kevins gets the top job at the Fed, don’t expect Trump to leave them alone.

—Adam Clark

***Join Barron’s senior managing editors Lauren R. Rublin and Ben Levisohn today at noon when they invite Adam Parker, founder and CEO of Trivariate Research, to a call in which they “ask Adam anything” about the 2026 investment outlook, the most promising stock sectors, and the risks to the bull market that keep him up at night. Sign up here.

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Delayed Jobs and Inflation Data Come Out This Week

The Fed’s December meeting is normally the last hurrah on a year’s macroeconomic calendar, but the government shutdown this fall means there will be two new reports this week: November’s job report, which comes with some October data, comes Tuesday, and November’s consumer price index comes on Thursday.

• Last week’s Job Openings and Labor Turnover Survey data were higher than expected. Economists are expecting November nonfarm jobs to rise 50,000 after a 119,000 gain in September, leaving the unemployment rate unchanged at 4.4%. The job market is potentially contracting, Appcast economist Sam Kuhn recently said.
• Job growth has slowed this year, to a monthly average of 76,000 through September—less than half 2024 levels—and even Fed Chair Jerome Powell has questioned whether that figure might be too optimistic. The Fed is worried about the jobs picture and has shifted its focus to the labor market.
• Cooling employment could fuel worries about a softening economy and may threaten gross domestic product growth if it chills consumer spending. However, a weak jobs report could also keep the Fed on track to keep easing monetary policy in 2026 December’s rate cut came with hawkish commentary.
• November inflation could paint a fuller picture. Economists expect a 3.1% gain from a year ago, with core CPI—excluding food and energy—rising 3%. September readings came in at 3% annualized growth for both. But the shutdown weighed on airfare and hotel prices, meaning November’s reading could come in light.

What’s Next: Michael Gapen, Morgan Stanley’s chief U.S. economist, expects November’s unemployment rate to tick up to 4.6%. “With the Fed’s forecast for the unemployment rate at 4.5% in the fourth quarter of 2025, we think any rise to 4.6% or above will keep the Fed in easing mode,” he wrote.

—Teresa Rivas

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Supreme Court Tariffs Decision Looms. 3 Ways It Could Play Out.

Clarity, in terms of an impending legal ruling over President Donald Trump’s tariffs, is unlikely to come with certainty. The Supreme Court could soon rule whether the levies are legal. There are three ways the decision could play out, based on Barron’s conversations with trade lawyers, policy consultants, and strategists.

• One path the Supreme Court could take would be a hybrid ruling, deeming the country-based “reciprocal” tariffs imposed under the International Emergency Economic Powers Act as illegal, but still preserving the levies on China and Canada that relate to fentanyl flows.
• Alternatively, the Supreme Court could rule that all IEEPA tariffs are illegal, which would shift importers’ focus to gaining refunds for the duties they have already paid. Some analysts say the court could suggest an administrative process to handle refunds—what would likely be a logistically heavy lift for U.S. Customs and Border Protection.
• The Supreme Court could also uphold the administration’s use of IEEPA and reverse the lower court’s ruling that found Trump overstepped his authority. Since 2007, when the court takes a case it has reversed a lower court’s decision about 70% of the time.

What’s Next: The decision, whichever way it goes, won’t close the book on trade volatility. “It isn’t going to create certainty: There could be litigation and new tariff authorities used,” said Everett Eissenstat, a partner at Squire Patton Boggs and former deputy director of the National Economic Council in the first Trump term. “It isn’t going to be a cut-and-dried outcome.”

— Reshma Kapadia and George Glover

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Elon Musk’s SpaceX Could Serve Up a Feast in 2026

SpaceX could be a feast for investors in 2026. Already a secondary share sale has pushed Elon Musk’s commercial space start-up to an $800 billion valuation, which is bigger than OpenAI and TikTok-owner ByteDance. And that’s while it prepares for an initial public offering that could be the biggest ever.

• The private company’s secondary sale, at $421 a share, was up from $212 a share in July. Bloomberg reported the secondary sale, citing an internal memo. When a public listing might happen is highly uncertain, and SpaceX didn’t respond to a request for comment.
• SpaceX doesn’t report its financial results, but Musk has said he expects it to generate around $15.5 billion in revenue this year. An $800 valuation would boost Musk’s wealth by roughly $160 billion. He owns about 40% of the company.
• SpaceX is the world’s busiest rocket launcher, accounting for more than half of global orbital launches. Most of its value is tied up in Starlink, its space-based broadband service that provides high-speed internet connections to more than eight million customers.
• Musk recently tweeted about launching solar-powered artificial intelligence data centers in space, which could link his AI company xAI, which also owns his social-media platform X, and Tesla. Wedbush analyst Dan Ives believes Musk’s companies will eventually invest in one another.

What’s Next: Bret Johnsen, SpaceX’s CFO, told employees in a note on Friday that a public offering could raise a significant amount of capital, The Wall Street Journal reported. Potential IPO proceeds could speed rocket launches, put AI data centers in space, and advance uncrewed and human missions to Mars.

—Al Root and Janet H. Cho

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What a Chubb-AIG Combination Could Mean for Investors

Some investors are thinking about a potential combination of insurers Chubb and American International Group, which would bring a member of the Greenberg family back to the helm of AIG. It’s still speculation after an industry publication last week wrote that the larger Chubb had made an “informal takeover approach.”

• Chubb said it “emphatically denies that any offer was made,” while AIG said it “is not for sale.” But a combination of the two property and casualty companies could eliminate overlapping costs and give the well-regarded Evan Greenberg, Chubb’s CEO, another major platform.
• Chubb has about $56 billion of annual premium revenue, more than double that of AIG. Its market value is $121 billion compared with $45 billion for AIG. AIG, built to prominence by Evan Greenberg’s father Maurice Greenberg, has executed a successful turnaround by CEO Peter Zaffino.
• Chubb, known for its high-end Masterpiece homeowner’s insurance franchise, is valued at 1.7 times third-quarter book value and 13 times projected 2025 earnings. AIG trades closer to 1.1 times book value. A combination means Chubb would also get AIG’s $89 billion investment portfolio alongside its $166 billion portfolio.
• CFRA analyst Cathy Siefert believes insurance M&A is likely to pick up as revenue growth softens. After several years of strong gains across many types of P&C insurance, pricing has been weakening. The more relaxed regulatory environment in Washington could also encourage tie-ups.

What’s Next: BofA Securities analyst Joshua Shanker said a combination risks possible revenue shortfalls if customers try to diversify away from a single large carrier. There could also be antitrust issues. But Shanker wrote that given Chubb’s higher price/book ratio, a deal for AIG might make more sense than buybacks.

—Andrew Bary

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Industry Watchers Hoping for Housing Market Recovery in 2026

It’s no secret the housing market struggled this year, but investors and industry executives are growing more hopeful about 2026. Economists at real estate information firm Redfin said that 2026 could begin what it calls the Great Housing Reset, an era of gradual increases in home sales and price normalization.

• After three interest rate cuts by the Federal Reserve, including last week’s move, mortgage rates have dropped to 6.2% from a peak of about 7% for a 30-year fixed home loan in January. Expectations are they could head even lower.
• Builders Hovnanian and Toll Brothers had distinctly low expectations after their recent earnings reports, which put pressure on the sector. Hovnanian CEO Ara Hovnanian said that while buyers are looking around, they are hesitating on a purchase because of economic uncertainty. “That will eventually pass,” he said.
• Toll Brothers CEO Douglas Yearley admitted that his company’s outlook was conservative despite lower mortgage rates and the underlying fundamentals that fuel housing demand, including favorable demographics and tight housing supplies. “All of these trends support demand for new homes.”
• Darius Dale, CEO of 42 Macro, said politicians’ attempts to fix housing before the midterm elections favors shares of builders, building suppliers, and retailers like Home Depot and Lowe’s. Laffer Tengler Investments CEO Nancy Tengler expects regulatory relief through first-time home buyer tax credits or incentives to home builders to increase supply.

What’s Next: Home builders continue to report earnings season, with Lennar and KB Home on tap this week. Analysts tracked by FactSet expect a third consecutive increase in quarterly sales for each, but revenue is expected to be lower than a year ago. Data on November existing home sales come out Friday.

— Paul R. La Monica and Janet H. Cho

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner