$40 Billion Trump Tariff Projection Reinforces 3 Holdings

As we get ready for another busy week of earnings reports and the start of October economic data, we are seeing expectations for the government shutdown to extend until Black Friday.

Betting on prediction market Polymarket has the shutdown ending on November 28, the day after the Thanksgiving holiday. But coming out of the weekend, we are seeing polling data showing Trump and the republicans are responsible for the shutdown, and others that point to Trump falling short of expectations on the economy, looking out for the middle class and handling inflation and the cost of living. These findings and the outcome of Election Day on Tuesday could translate into renewed efforts to end the shutdown sooner than reflected in the current figures from Polymarket.

As you know, we tend to examine policy and data, leaving politics at the door when it comes to the Pro Portfolio. With that in mind, today we’ll bet the October ISM Manufacturing Index, which is expected to see the headline figure inch up compared to September, but still land in contraction territory. Job creation is expected to shrink given the 45.5 figure expected by the market, and inflation is poised to remain little changed compared to September. That means staying at elevated levels.

Before we jump to any conclusions, let’s remember the Service part of the economy accounts for 85% to 90% of GDP, which means the October Service PMI data on Wednesday will carry much more weight for GDP revisions as well as job creation and inflation data. Wednesday also brings ADP’s October Employment Report, which is expected to show 24,000 jobs created during October versus the 32,000 lost in September. Triangulating the October ISM Services data and ADP’s findings with a dash of Monday's October ISM Manufacturing Report will not give us a perfect picture of the economy, but one we can work with.

LendingTree, Chipotle, Shake Shack on the Consumer

While we get ready for those figures, LendingTree (TREE) estimates Trump tariffs will increase holiday costs by a total of $40.6 billion. Working through its math, LendingTree sees consumers being on the hook for about $28.6 million of those costs, which translates to around $132 per shopper.

While to some that may not sound like a substantial figure, comments made by the CEOs of Chipotle (CMG) and Shake Shack (SHAK) served to remind us about the bifurcated condition with consumers.

Chipotle CEO Scott Boatwright shared on its earnings call that:

"Earlier this year, as consumer sentiment declined sharply, we saw a broad-based pullback in frequency across all income cohorts. Since then, the gap has widened, with low- to middle-income guests further reducing frequency."

A day later, Shake Shack CEO Robert Lych commented:

"I think it's pretty broadly understood that there's definitely some pressure on the lower-income consumers. And I think there's also been some commentary about the unemployment rates of younger populations as well, which obviously impacts our industry."

Adding in LendingTree’s findings tells us we remain well-positioned with our plays in Costco (COST) , TJX Companies (TJX) and Amazon (AMZN) when it comes to the holiday shopping season. That explains why Oppenheimer named COST a Top Pick on Monday morning, sharing that Costco’s “outperformance case is now even stronger in a mixed consumer spending backdrop given the company's superior value proposition.”

But depending on what happens ahead when it comes to Affordable Care Act subsidies, there could be more pressure on consumer spending, leading even more to trade down or use other methods to stretch their spending dollars.

A recent analysis from KFF found that if the enhanced premium tax credits expire, as they are currently set to do on December 31, ACA enrollees will see their monthly premiums more than double — rising by roughly 114% on average. An estimated 22 million out of 24 million ACA marketplace enrollees are currently receiving a tax credit to lower their monthly premiums. Even if those credits are extended, KFF found that the amount insurers charge for ACA premiums will rise by an average 26% in 2026.

That last part keeps us bullish on COST, TJX and AMZN shares into 2026.

Programming note: Because I am traveling back to New York on Monday, we will not be holding Office Hours today, but, barring any TSA and air travel-related issues, we will be holding them on Thursday, November 6, between 4 p.m. and 5 p.m. in the Forum. I will be appearing on Taking Stock Monday live from the NYSE as the market closes, which you can watch on Cheddar, FintechTV and NYSE TV.

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At the time of publication, TheStreet Pro Portfolio was long COST, TJX and AMZN.