China’s trade surplus hit $1.1 trillion, Data on the labor market, Inflation reports great progress, Want to become a millionaire? Invest in your 401(k)! Itemized Deductions Before Dec. 31st & More

How did China’s trade surplus hit $1.1 trillion this year?

The United States purchased around $450 billion of manufactured goods from China in 2024, but trade has dropped between the two countries so how did China have a record surplus of $1.1 trillion through November 2025? The current tariff on goods imported from China is around 37% according to the Tax Policy Center and imported goods from China have dropped dramatically. China has been able to increase their exports to other countries to more than compensate for the loss of exports to the United States which are down roughly 19%. China has seen an increase of exports to Southeast Asia of 14%, the European Union has increased 8%, and Latin America saw a 7% increase in exports from China. A big increase of 25% in exports to Africa was also very helpful to China’s manufacturing surplus. Even though they’re turning out more cars, manufacturing products and chemicals than ever before, it has created a very heavy competition in China which is pushing down prices, profits, and income for the Chinese manufacturing companies. There will not be another round of talks between the US and Chins until next year. At the last set of trade talks the US did lower our tariffs and China promised to buy American soy beans and end a plan to tighten the export of rare earths, which are critical and found in many products from jet engines to cars and many other electronics as well. We will continue to follow the developments of these trade talks as there should be more news coming next year!

Finally some data on the labor market!

With the government shutdown, a lot of the data for the labor market was delayed. We finally got employment figures for October and November, and they were interesting to say the least! To start, the October numbers looked horrific considering payrolls declined by 105,000 in the month. While this sounds troubling, it's important to remember all of those government workers on severance were still counted as employed until the severance ended. This led to a decline in government payrolls of 162,000 in the month of October. Losses in government payrolls continued in November, but at a much slower rate as they tallied 6,000 in the month. Since reaching a peak in January, government employment has seen a decline of 271,000 jobs. Looking at November, payrolls increased by 64,000, but healthcare continued to carry most of the weight as the sector accounted for more than 70% of the total net increase and added 46,000 jobs. Construction was also strong in the month as the sector added 28,000 jobs, but many other areas saw little change and transportation and warehousing was weak as payrolls declined by 18,000. Another concern in the report was the unemployment rate ticked up to 4.6%, which was above the 4.4% level in September and marked the highest reading since September 2021. Overall, when I look at the labor market it is definitely slowing, but I wouldn't say I'm overly concerned at this point in time. While it is concerning to see declines in the payroll level in three of the last six months, for the most part the private market has done a good job picking up the large declines in the government sector, which I view as healthy. I don't want to say our labor market is booming at this point in time, but I would still classify as relatively healthy. 

Inflation report shows great progress, can it be trusted?

Headline November CPI came in at 2.7% compared to last November, which was well below the estimate of 3.1% and core CPI, which excludes food and energy, showed an increase of just 2.6%. This was the lowest reading for core CPI since March 2021 when the increase was just 1.6% and it also came in well below the estimate of 3.0%. Some areas in the report remained challenging particularly in food, where we saw uncooked beef roast climb 21.2% and coffee increase by 18.8%. Beef prices have struggled as cattle supply touched its lowest point in 2025 since the early 1950s and coffee prices have been hit by extreme weather in major coffee-producing countries as well as the tariffs levied on Brazil. Shelter inflation was positive in the report as the annual increase was just 3% and it's believed there is more relief coming for the largest weight in the CPI, which generally occupies around 1/3 of the headline number. If the inflation for shelter slows further, it would be very beneficial for the inflation rate as we progress through 2026. The big problem with this report is there are questions about how accurate the data is. Due to the shutdown, there was no data collected for the month of October, and the BLS was only able to collect data for about half the month of November as the shutdown did not end until November 12th. For the time being we are pleased with the results from this CPI report, but I do believe there will now be even more emphasis on the December CPI as that will be the first full month of data following the record-breaking government shutdown. 

Farmers will be receiving $12 billion to help with their difficulties this year

Make no mistake American farmers have been having trouble for several years with a huge production of crops, but depressed prices with low demand compared to the supply. To help out the situation, Washington is sending $11 billion around the end of February as a one-time payment to the Farmer Bridge Assistance Program to help out US crop farmers. $1 billion will go towards other commodities that are not covered under the Farmer Bridge Assistance Program. Farmers need this money soon to help pay down debt that they have built up this year, and they can also use it for planting next year's crops. You may be wondering, what is the big deal and who really uses soybeans? Soybeans on an annual basis are about $124 billion, which is roughly 0.6% of the United States GDP and is the largest export of agricultural products by value. Almost 50% of the crop is exported with roughly half of that going to China to feed their livestock. If we can trust China this time, they have pledged to buy 12 million metric tons of American soybeans by early 2026 and then 25 million metric tons annually in 2026, 2027, and 2028. Unfortunately, at last count, China has only purchased about 2 1/2 million metric tons of soybeans, let’s hope they complete that purchase and stick to their commitment this time.

Want to become a millionaire? Invest in your 401(k)!

There are more and more people with $1 million or more in a 401(k) as companies like Fidelity and Vanguard are seeing record numbers of people with accounts of more than $1 million. Fidelity said they hit the highest level ever when it comes to 401k millionaires with about 3.2% of their 401k’s or 654,000 accounts now over $1 million. Vanguard also had similar numbers for 401k millionaires. Becoming a 401k millionaire is not a get rich quick scheme, but it's a proven way to build your wealth long-term with proper investment choices. It is estimated that roughly 86% of those with $1 million plus in their 401k are 50 or older. It is also estimated that around 1000 people per day become 401k millionaires in the US. The key to becoming a 401K millionaire is to invest wisely, which means not too aggressive, but also not too conservative. Also, when a portfolio drops, you cannot sell everything and wait for the market to get better, you or an investment professional must verify that you have good quality investments in your portfolio that can handle the financial storms and also it's important to continue adding to your portfolio during these difficult times. It is important not to pull money out from your 401(k) for any reason at all, no matter how bad you think the situation is, it will improve. It is much better to deal with problems when you’re young rather than when you're in your 60s because you did not let your 401(k) grow to over a million dollars.

Financial Planning: Taking Advantage of Itemized Deductions Before December 31st

With the repeal of the $10,000 SALT deduction limit, many taxpayers may once again benefit from itemizing deductions rather than taking the standard deduction, and there are practical steps that can be taken before year-end to further enhance that benefit. The SALT deduction includes both state income taxes and property taxes, and because individuals are cash-basis taxpayers, deductions are generally taken when expenses are paid rather than when they are due, meaning that paying certain obligations before December 31st can shift future deductions into the current tax year. In California and many other states, property taxes are paid in two installments, with the first due in December and the second due in April. If the April installment is paid by December 31st, it may be deductible in the current year instead of the following one. Similarly, the final state estimated tax payment is typically due on January 15th, but making that payment in December allows the deduction to be taken in the current year. Another significant itemized deduction is mortgage interest, and while mortgage payments are usually due on the first of the month, making the January 1st payment in December can allow the interest from that payment to be deducted in 2025 rather than 2026. In addition, charitable deduction rules are scheduled to change in 2026 and will be subject to an adjusted gross income (AGI) limitation, which means taxpayers who are charitably inclined may benefit from accelerating planned donations into the current year while the rules are more favorable. Taken together, these strategies tend to be most effective when income is higher in the current year, as accelerating deductions while in higher tax brackets results in greater overall tax savings.

Check out the new high-tech company, Walmart

If you’re like me, you remember Walmart being known as a retailer with good products at low prices. This was the original theme that the founder Sam Walton built the company on. The stock over the years generally did well but would never trade much above 20 times earnings. Today as the stock has risen about 25% this year, it has a market cap just under $1 trillion and trades roughly at 40 times forward earnings. If that sounds like a lot, it is and is higher than six of the Magnificent Seven stocks. On Tuesday, December 9th the stock began trading on the NASDAQ, which could give the company stock even more of a boost going forward as it is estimated passive investment vehicles like ETF’s and index trackers could add roughly $20 billion or maybe more to Walmart. One reason for the stocks’ impressive performance has been Walmart's strong net income growth, which has seen double digit percentage gains for the third year in a row. Walmart's earnings increase over the past few years has largely come from their US E-commerce sales, which have been growing by over 20% per quarter for 10 of the last 11 quarters. I was surprised to learn that Walmart can now deliver within three hours to 95% of US households, which is a huge increase from 76% just two years ago. Walmart now gets ad revenue from its E-commerce site, which has grown by about 30% in recent quarters. Walmart also has a paid membership like Amazon but currently only 18 million US households have a Walmart paid membership, far below Amazon's 107 million prime members. It looks like this is not Sam Walton‘s Walmart any longer. They have really taken lessons on how to enhance their revenue and earnings and I'm sure that has pleased the Walton family and other long-term shareholders. Even with the impressive results, I'd be careful buying any business at around 40x earnings. 

The big electric vehicle boom that never happened

It was just about two years ago that people were saying in the next 5 to 10 years gas vehicles would be gone, and they’ll be nothing on the road but electric vehicles. Looking at how history has worked, I would comment and say yes electric vehicles are here to stay, but in the future consumers will have a choice of either a gas-powered vehicle, an electric vehicle or maybe a hybrid vehicle. Just like the story of Beyond Meat, where people thought eventually there would be no red meat left, we know how that story is unfolding with Beyond Meat struggling and plenty of red meat still being consumed. With electric car sales, they have fallen through the floor. In November, even the pure electric vehicle company Tesla saw sales declined by 23%. Ford has also been impacted by the lack of demand in EVs as it made a big investment in electric vehicles and also said in the future, it would only be making electric vehicles. Well, that whole plan has gone down the toilet, and Ford recently announced that they will take a $19.5 billion charge and go back to producing more traditional gas vehicles and focus more on hybrid vehicles. For investors history has proven that big changes don’t happen just in a few years and some changes never happen at all.

The number of billionaires around the world continues to grow

There are now about 2900 billionaires around the world, which is an increase of about 200 from around the 2700 billionaires we saw last year. The billionaires control a large amount of wealth considering last year the 2700 billionaires controlled about $14 trillion. With the growth in the number of billionaires and climbing asset prices, that has increased by $1.8 trillion this year to $15.8 trillion. You may be wondering how these people became billionaires; the primary ways were entrepreneurship or inheritance. Roughly 45% of the new billionaires made the class by inheriting money that was passed down from family. Because the numbers are so big, it is easy to see why people have been talking about this massive pending wealth transfer for the last couple of years. While others may not become millionaires or billionaires from an inheritance, many people will be receiving hundreds of thousands of dollars that will increase their net worth. You may be an heir to someone that is rather wealthy but understands things can change such as overpriced investments that could become losses, and sometimes medical expenses can wipe out some decent size estates. I still believe the best way to build wealth is to work smart and work hard, invest properly or run a business and come up with a product or service that fills a void.

Risk on Wall Street is rising as prediction markets become more available

Prediction markets, which are nothing more than gambling on sports, election results and economic data are now popping up everywhere. The obvious reason is that brokerage firms can make a lot of money off of people's weakness when it comes to gambling. The most recent addition to this craziness is Coinbase Global, which is adding prediction markets gambling to its crypto business. They’re calling it the everything exchange. I think that means you can pretty much gamble on anything you want. If you notice, I do not call this investing because it is not! It is speculation and gambling at the highest level. I presume the most likely people to lose money are the ones who can least afford it, and being allowed to do this on an investment platform is ridiculous. There are also other platforms like Flutter Entertainment's FanDuel, DraftKings, and Truth Social through a partnership with Crypto.com that will be entering the prediction markets space. There’s no doubt in my mind that this will end badly one day for many people, and they will probably look for help from the government or someone else that was more conservative with their retirement. Other critics point out that this market is lightly regulated and is more susceptible to insider trading and market manipulation. Have people not learned anything from the story of the three little pigs?