The question with which I begin this letter is one that citizens of all countries are asking, as discontent grows due to societal polarization, the apparent divorce between the government and the people, and the widespread impression that the future holds no improvement for those governed. In a global survey commissioned by the International Monetary Fund in more than 40 countries, not a single respondent said that they are better off today than they were 10 years ago or that they believe they will be better off in 10 years than they are today.
In the United States, the government shutdown has continued for 32 days, with government employees not being paid, aid and subsidies to the less fortunate being suspended, and airports experiencing hundreds of cancellations and thousands of delays due to the slowdown by air traffic controllers who refuse to work unless they are paid. All this is because of blackmail by the Democratic minority, which refuses to agree to a deadline for negotiating a new healthcare plan. Once again, we see that the positions of politicians from both parties take precedence over the needs of citizens.
Tomorrow is the New York mayoral election, and all eyes are on Mamdani, a communist with no government experience, who is leading the race for the position based on promises of rent freezes, free transportation, city-owned supermarkets operating at cost, replacing police officers with social workers, and other offers that make no sense and will cause those who can to move to other cities. President Trump had an apparently successful trip to the Far East. He managed to postpone for a year the crisis of “rare earths” controlled by China, which were essential for making the magnets used in many industries. He also secured China’s agreement to resume purchasing the soybeans on which many farmers depend, in exchange for partially eliminating tariffs, lowering them from 136% to 47% on products imported from China. During the trip, he also reached agreements with Vietnam and Cambodia. He secured investment commitments of $900 billion from Japan and Korea, bringing the total investment pledges to $18.4 trillion, 55% of the U.S. GDP.
In the United States, lower courts continue to block many of the executive branch’s initiatives, and soon the Supreme Court will have to decide how far the powers of the presidency extend without judicial interference. This week, the Supreme Court will issue a ruling on the legality of imposing tariffs without congressional approval. An adverse decision would require the government to return more than $180 billion already collected.
This month, a ceasefire was signed in Gaza with the intervention of many countries, and although it appears fragile, the 20 hostages were returned alive. It is hoped that this will be the basis for a definitive agreement that will allow Israel to return to focusing on growing the country and the citizens of Gaza to begin rebuilding their properties.
The Fed lowered interest rates by ¼ of a point, despite not having access to employment data due to the government shutdown. The decision was not unanimous, as two of the governors voted against this action: one, appointed by Trump, who wanted a larger reduction, and another who felt that the fight against inflation was being lost and did not want any change. It is worth noting that the 10-year bond rose 0.1% due to market fears of an increase in inflation, which was reported to have risen from 2.9% to 3%, contrary to the FED’s goal of lowering it to 2%.
The United States is negotiating a bilateral treaty with Canada, which raises doubts about what will happen next year with the review of the USMCA; however, the Canadians are firm in their position. Incidentally, visits by Canadians to the United States have fallen by almost 60% following comments about making them the 51st state of the American Union. The U.S. economy has demonstrated strength in production, as evidenced by the rising PMI index, but consumer confidence is declining. The average home sale price fell for the first time in 40 months, dropping 0.2%, although the increase for the year remains positive (1.2%). I found it interesting that in the last fiscal year, only 2.8% of homes changed hands, the lowest figure in the previous 40 years.
The budget deficit decreased by 2%, primarily due to the collection of tariffs, but is projected to end the year at $1.8 trillion, the same figure as the previous year. The U.S. government’s debt reached $33.8 trillion, with an average interest rate of 3.4%, resulting in annual interest payments of $1.15 trillion. This explains why Trump insists so much that Powell, the Fed chairman, is not doing his job well and should lower interest rates much faster. In a survey on retirement, 80% of respondents said they are no better prepared to retire than they were five years ago, despite the growth of their savings funds due to improvements in the stock market. Car repossessions by credit companies reached an all-time high. An estimated 22 states are in a technical recession, characterized by two consecutive quarters of negative GDP growth.
President Trump announced that H1-B work visas for scientists and technicians with specialties not found in the US will increase from $3,600 to $100,000 per year, prompting immediate complaints from large technology companies. This measure is a mistake, as these scientists contribute significantly to the advancement of the United States, and far fewer will be able to be brought in. We are also beginning to see excellent foreign researchers returning to their countries, as government funding for university research has been eliminated.
Some interesting data reported in October included:
· The birth rate in California is 1.42, well below the 2.1 needed to prevent population decline.
· The San Francisco Center, the most important shopping center in the city center, is 93% empty.
· Harvard’s endowment grew 10.9% to $56.9 billion.
· ISS, the company that advises shareholders on how to vote on initiatives proposed by the boards of public companies, suggested a radical move to vote against the proposal to give Elon Musk a stock award valued at $1 trillion if he meets a series of conditions.
· Losses from natural disasters over the past 25 years amount to $7.7 trillion, 36% of GDP growth over the same period.
· People over the age of 16 spend 140 minutes a day on social media.
· There are 3,508 billionaires in the world, 40% of them in the United States.
Moving on to Mexico, we see that the situation is not improving in terms of corruption, with daily reports of politicians’ trips and wasteful spending. Trump attacked again, saying that the country is run by drug traffickers, and incidents such as the murder of the mayor of Uruapan, who died for speaking out against the cartels, and who was supposedly protected by the army after receiving death threats.
As always, I separate the positive news from the negative.
Positive:
· First month in the last six to see an increase in car sales.
· 314,656 cars were exported, compared to 296,796 the previous month.
· Finally, Banamex will be sold, 25% to Chico Pardo and the rest in a public offering on the stock exchange.
· Foreign investment announcements continue. Salesforce will invest $1 billion.
· Reserves reached a historic high of $249.744 billion, enough to cover 100% of foreign liquid investments, which amount to $188 billion.
· Cetes are at 7.30%, the lowest since June 2022.
· Pemex committed to paying 50% of its debts to suppliers.
· Cemex reported an outstanding quarter, although it contracted in Mexico.
· Fitch raised its GDP growth forecast for 2025 to 0.5% and said there will be no recession.
Negatives:
· Investment in fixed assets fell at an annual rate of 6.6%.
· IMSS reported a loss of 34,000 jobs.
· Consumer confidence fell from 48.3 to 43.7.
· The World Bank estimated GDP growth for the next three years at 0.5%, 1.4%, and 1.9%, which is very low for an emerging country.
· Bimbo, Gruma, and Cuervo, the three consumer companies operating on the US stock exchange, reported low sales.
· Huge losses were reported due to fuel theft, amounting to over $11 billion.
· The new law on partnerships between PEMEX and private companies is very complex and discourages foreign investment.
· The trade balance for September was -$2.399 billion, higher than the $500 million that was expected.
· Pemex reported losses of 61.25 billion pesos on sales of $378.8 billion, with a 6.6% drop in production to 1.65 million barrels per day, half of what it was 10 years ago. The state-owned company remains the most indebted company in the world.
· Alsea, the country’s leading owner of popular restaurants, reported a drop in consumption.
· Q3 GDP fell 0.3%.
· The United States canceled commercial routes originating at AIFA, a severe blow to an airport that was already in trouble.
The Israeli economy is experiencing much slower growth (0.4%) in October 2025 than it has so far this year, following a 3.9% contraction in Q2. The expectation is for 1.7% growth for the whole year. A recovery of 4.2% is expected for 2026. Debt reached 71% of GDP, and the budget deficit reached 5%. This is a consequence of the conflict in Gaza, the mobilization of reservists, and the absence of Palestinian workers. With the ceasefire, the situation is expected to begin to improve, although 46,000 companies have gone bankrupt since the war started.
In the rest of the world, there are many interesting developments, such as India‘s massive drop in Russian oil purchases in response to pressure from Trump, the first direct flight from India to China in five years, a clear sign of the rapprochement between the world’s two most populous countries, and China’s GDP growth of 4.3%, the lowest in almost 20 years, even though its exports to other countries grew by 8.1%. Chinese investment in the United States, which reached $58.3 billion in 2016, fell to $2.1 billion as of 2025. Until a week ago, there was global concern about restrictions on the export of “rare earths.” The World Bank reduced its growth forecast for Southeast Asia from 6.6% to 5.2% due to tariffs imposed by the United States. It also reported that global debt reached 125% of world GDP.
In Europe, Germany reported a deflation rate of 0.9%, and European Union exports declined by 22% due to U.S. tariffs. Oil production in Russia fell 10%, and the embargo imposed by the Americans due to the war in Ukraine is affecting them significantly. Saudi Arabia announced that it will issue $2 trillion in debt to fund its project to transform the country from an oil-producing nation to an industrialized one, which is being complicated by the decline in oil prices.
In South America, Peru experienced an unexpected change in its presidency, coinciding with a significant accident at one of the country’s largest copper mines. Brazil’s economy grew 0.4% in the quarter, compared to a projected 0.7%. However, its high interest rates are finally winning the battle against inflation, which fell to 5.17%, closer to the central bank’s 4.5% target. In Argentina, Milei achieved a significant victory in the midterm elections, demonstrating the acceptance of his austerity program among the middle and lower-middle classes. In addition, his relationship with Trump earned him support from the United States, which purchased $40 billion in Argentine pesos, thereby strengthening the currency and providing the country with liquidity for its international operations.
The financial markets had a perfect month, reaching historic highs on the stock exchanges. This was due to the decrease in questions about the impact of tariffs and the increase in all stocks related to artificial intelligence. The drop in interest rates caused bonds to appreciate slightly. Of the companies that have reported third-quarter results, 80% reported higher-than-expected sales and 78% reported higher profits. Gold reached $4,550/oz but fell back below $4,000, and bitcoin fell slightly to $107,500. The dollar recovered somewhat, and the peso fell as a result of the Bank of Mexico’s interest rate cut.
Further Reading: