Mr. Musk Goes to Washington — With a $2 Trillion Agenda

### The Musk Budget-Cutting Commission

The incoming administration intends to establish a Department of Government Efficiency, headed by Elon Musk and Vivek Ramaswamy, to address government spending inefficiencies. This move could grant Musk substantial influence, given his companies’ federal contracts. The commission aims to cut regulations, eliminate wasteful spending, and restructure federal agencies, with Musk proposing a $2 trillion budget reduction. However, the commission's actual power and its impact on Congress remain unclear. Funding sources are also uncertain, with potential private investor involvement being considered.

### TikTok and Trump's Reversal

TikTok's position has shifted favorably under the president-elect. Initially targeting TikTok for national security reasons, he now appears inclined to allow it to operate in the U.S., influenced by connections with significant stakeholders. Trump’s reversed stance follows interactions with major investors aligned with TikTok's parent company, ByteDance. This reversal raises questions about Trump's future policies towards China and whether ByteDance will implement sufficient changes to meet security concerns and extend operational deadlines in the U.S.

### Inflation and Economic Policies

Investors are increasingly concerned about inflation, with potential economic initiatives potentially affecting the Federal Reserve's efforts to control rising prices. Recent reports indicate the difficulty in managing this, as market indicators reflect investor anxiety. Proposals for fiscal policies and tariffs could add to inflation pressures, impacting rate cut probabilities. Analysts suggest that forthcoming economic data will play a crucial role in shaping future monetary policies.

### Shareholder Activism and Its Momentum

Honeywell’s shares saw significant growth after an activist investor acquired a substantial stake, highlighting a resurgence in shareholder activism. This trend is anticipated to grow under the incoming administration, which might ease restrictions on mergers and acquisitions (M&A). The activist investor proposes that Honeywell should consider breaking up its operations to enhance performance, following similar corporate restructuring seen in other conglomerates. Honeywell remains open to shareholder perspectives as it evaluates strategic options.