Bloomberg - Evening Briefing - Confidence is wavering

Wall Street’s masters of the universe have long argued they can spend money more efficiently than the US government ever could. Now, a handful of them will get the chance to put your money where their mouth is. Deep inside the Commerce Department, Secretary Gina Raimondo has pulled together a team including former executives from Goldman Sachs and KKR to divvy up about $100 billion worth of subsidies and loan guarantees intended to turn the US back into a semiconductor powerhouse. The tiny electronic components that run everything from electric vehicles to nuclear missiles are at the center of a geopolitical struggle between Washington and Beijing, and the Biden administration wants to maintain American primacy in that contest. “This is the first time in a very long time that the government is giving significant quantities of money to really well-run, sophisticated, well-capitalized companies in a sort of industrial-policy kind of way,” said investment chief Todd Fisher, who spent over two decades at KKR. “And that takes a different approach.” —David E. Rovella

Moody’s Investors Service, the only remaining major credit grader to assign the US a top rating, has signaled that its confidence is wavering ahead of a potential government shutdown threatened by Congressional Republicans. While “debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns,” analysts wrote in a report Monday. The blunt warning follows a downgrade last month by Fitch, which cited concerns over the catastrophic US debt default that almost happened earlier this year. In both cases, far-right Republicans urged on by Donald Trump were the driving force behind the budgetary brinkmanship. GOP House Speaker Kevin McCarthy has been unwilling to work with Democrats on temporary funding to keep the government open, partly out of concern of being ousted by those same members of his own party.

Back in its heyday, Fenway Partners was busy snapping up companies, doing deals from its offices high above Manhattan and Los Angeles. Decades later, a three-man team manages its remnants from a beach town in Rhode Island. Its main asset is a 20-year investment in a maker of football helmets beset by lawsuits from athletes over concussions. Across the $12 trillion industry, hundreds of private equity firms are lumbering on years after their funds’ intended twilight with no new fundraising in sight—a cohort that investors and regulators have dubbed “zombies.” 

As the cross-asset selloff engulfed Wall Street last week, hedge funds ramped up their bets against stocks. From retail investors to rules-based systematic traders, appetite for equities is subsiding after a 20% rally this year fueled by artificial intelligence euphoria. Behind the latest bout of pessimism is the apparent resolve by the US Federal Reserve to keep interest rates higher for longer—creating pressure on already stretched market valuations. 

Amazon says it will invest as much as $4 billion in Anthropic, bagging a crucial partner in its effort to become a major player in generative AI. The e-commerce behemoth has long taken stakes in partners in areas it deems a priority, including cargo airlines, a grocery distributor and an electric truck manufacturer. But the investment in Anthropic could represent something much bigger.

Egypt and Ethiopia made little headway in their latest talks over a controversial Nile dam that has become a flashpoint between several African nations. Egypt, which is concerned the $4.6 billion dam on the Nile’s main tributary will affect flows that account for 95% of its fresh water, has strongly criticized the continued filling of the dam without a binding deal.

The Grand Ethiopian Renaissance Dam in Guba, Ethiopia. Photographer: Amanuel Sileshi/AFP/Getty Images

Philippine central bank Governor Eli Remolona signaled officials are intervening to defend the peso at the 57-per-dollar level to prevent the currency from weakening further. The peso is among the worst-performing Asian currencies this quarter, dropping almost 3% against the greenback. 

Ukraine’s military said its troops have made advances along the southern frontline against entrenched Russian defenses just as US main battle tanks arrive to bolster the four-month-old counteroffensive. Kyiv’s forces moved forward near the village of Verbove in the southern Zaporizhzhia region, with troops pushing toward the occupied Russian strongholds of Tokmak and Melitopol farther south, according to the Ukrainian General Staff. The Institute for the Study of War called it a “tactical breakthrough.” 

US Abrams main battle tanks during a training exercise in Nowa Deba, Poland. Photographer: Omar Marques/Getty Images

• The Kremlin may soon have a friend running Slovakia.
• Bonds sink as the S&P 500 snaps a losing streak: your markets wrap.
• Only the richest 20% of Americans still have excess pandemic savings.
• OpenAI gives ChatGPT the ability to speak in five different voices.
• Costco is offering members online health care visits for just $29.
• After upgrades, Apple’s cheapest iPhone 15 is winning buyers.
• In London, these secret “James Bond” tunnels may draw tourists.

The days are getting shorter and colder, which means it’s time to think seriously about your fall reading list. We’ve sifted through fall’s newest titles and compiled a top 10 guide so you don’t have to.

American Gun: The True Story of the AR-15

Get the Bloomberg Evening Briefing: If you were forwarded this newsletter, sign up here to receive Bloomberg’s flagship briefing in your mailbox daily—along with our Weekend Reading edition on Saturdays.

Bloomberg Technology Summit: Join top technology leaders, business executives, innovators and entrepreneurs in London or virtually on Oct. 24 for a day on how technology might help solve pressing global challenges. From reducing CO2 emissions and making cities more livable to affordable healthcare and combatting food insecurity, executives from Deliveroo, Siemens, Graphcore and more will examine where tech innovation can lead us. Click here for details.