Affordability will be 'Winning Category' for Midterms, Says Monica Guerra

Monica Guerra, Executive Director and Head of US Policy at Morgan Stanley Wealth Management, discusses the affordability focus going into midterm elections and how Trump policies are reshaping the economic landscape.

Consolidated Edison Inc. can raise revenues by just 2.8% per year for three years, under an agreement adopted by New York regulators Thursday.

The deal between Con Ed, consumer advocates and other parties will raise the utility’s revenues by $234 million in the first year and more than $400 million in each of the next two years — while capping increases in customer bills at the rate of inflation, according to a statement by the Department of Public Service

Affordability was a key consideration for regulators, as power prices surge to record highs across the country. The Trump administration recently pushed for an emergency wholesale electricity auction to limit data center impact on customer bills.

While the rate increase is 85% lower than Con Ed had initially sought, it reflects a return on equity of 9.4%.

Con Ed’s rate case stretched over much of the previous year, with the company initially proposing to increase electric bills by 11.4%. New Yorkers crowded public meetings to oppose a big rate hike and Governor Kathy Hochul even called on regulators to reject the company’s proposal.

As the US earnings season gathers momentum, early results are offering a window into the economic and political crosscurrents shaping Corporate America’s outlook for the year ahead.

Airlines were among the first to flag risks. Delta Air Lines Inc. struck a cautious tone on profits amid geopolitical uncertainty, while United Airlines Holdings Inc. warned that global tensions could weigh on travel demand. Meanwhile, executives at consumer staples giants Procter & Gamble Co. and McCormick & Co. said shoppers remain cautious.

3M Co. fell the most since April after its outlook missed estimates, with the maker of Post-it notes, roofing granules and electronics materials saying the macro environment remained uncertain for its consumer and auto businesses. Signs of strain are lingering in industrial sectors as reports from distributor Fastenal Co. and logistics company JB Hunt Transport Services Inc. disappointed investors.

The downbeat commentary stands in contrast to many of the headline economic indicators. Data from last year pointed to solid growth and resilient consumer spending. Among S&P 500 Index members that have reported so far, 80% have topped analysts’ expectations as of the close on Thursday, according data compiled by Bloomberg Intelligence.

Policy uncertainty “absolutely” overshadows positive news from companies, said Steve Sosnick, chief strategist at Interactive Brokers. “It does make it much harder for management to plan... but what CEO is going to say, ‘the policy instability coming out of the White House is making it very difficult for me to manage my business?’”

Companies are reporting results amid a rare convergence of political disruption and global uncertainty. Stocks are trading at high valuations after the S&P 500 clocked in three straight years of double-digit growth, leaving little room for error.

Corporate executives now face the tough task of laying out the companies’ outlook for the year ahead as President Donald Trump continues to reshape the country’s trade relations and international policy.

“The environment across our key markets is marked by volatility and continued pressure from inflation, geopolitical and trade uncertainty” and the risk of rising unemployment, McCormick Chief Executive Officer Brendan Foley said on a conference call on Thursday. “Overall consumer confidence remains low.”

Shares of the spice and seasoning maker slid the most in two years after both fourth-quarter earnings and its outlook for the year fell short of expectations.

Procter & Gamble, the maker of Pampers diapers and Tide detergent, noted similar disruptions, though it expects sales will increase in the next six months.

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