Bloomberg - Evening Briefing - Starting to buckle

Autoworkers on strike. A looming government shutdown. Energy prices on a tear. Fresh pressure points are appearing that potentially challenge the consensus that a soft economic landing is in the cards following the US Federal Reserve’s war on inflation. The numbers for September clearly reflect some level of retrenchment among investors who may be thinking all will not remain rosy—it was the worst month for the S&P 500 this year. Simultaneously, an equal-weighted version of the index—where the likes of Expedia carry the same heft as Microsoft—has now shed almost all of its 2023 gains, hurting active managers who failed to buy up the biggest blue chips. The Fed’s restrictive monetary policy has tightened financial conditions by design. But there’s a new fear among hedge funds and real-money investors who have pared back their equity exposure: The once-fearless US consumer may be starting to buckle. —David E. Rovella

The US government shutdown looks like it’s coming. GOP House Speaker Kevin McCarthy was embarrassed again by his party’s far-right as they torched his plan to keep the government open for 31 days past Sunday’s deadline. 

Inside Citigroup, CEO Jane Fraser has given her top 150 managers until the end of November to explain how they plan to strip away the layers of bureaucracy that have long plagued the company. For staffers awaiting their fate, that spells weeks of anxiety-ridden town halls and nervous one-on-one meetings with their bosses. The bank has already fired thousands of its employees. This next phase, though, will be about terminating Citigroup workers in the two or three layers below the CEO that are tied to old divisions and legacy geographies.

Ford is waiting on a deal with the striking United Auto Workers union, as well as the clarification of content rules in President Joe Biden’s Inflation Reduction Act, before it moves forward with plans to build a battery plant in Marshall, Michigan, Chief Executive Officer Jim Farley said Friday. Ford paused construction of the Michigan plant earlier this week, prompting accusations from the UAW that it’s using scare tactics to try to intimidate union negotiators.

Jim Farley Photographer: Dia Dipasupil/Getty Images North America

America’s crop exports are once again at risk due to a diminished Mississippi River. Months of dry weather and the hottest summer ever shrunk the vital channel that funnels barges of grain and soybeans from the Midwestern crop belt to Gulf Coast ports. Barge operators now are running lighter loads to compensate for the lack of water. 

There was always a cloud over cryptocurrency. It’s perhaps never been thicker than in the months since the downfall of FTX and its young leader, Sam Bankman-Fried. And it isn’t likely to lift anytime soon, seeing as the deposed crypto king faces trial next week for what prosecutors allege was one of the biggest financial frauds in US history. 

Carnival Corp. posted a profit for the first time since 2020 but issued a fourth quarter earnings outlook that missed Wall Streets’ expectations as higher fuel and currency costs weigh on its operations. The strong sales came amid increased consumer demand for travel in America, which Carnival sees persisting.

The US Energy Department is in talks to lend a record $1 billion to the developer of one of the country’s largest lithium deposits in a push to build out a domestic supply of critical minerals. The Biden administration and  Lithium Americas Corp. are said to be negotiating the terms of an agreement that would fund more than half of the cost of the Thacker Pass mine in Nevada.

The White House and Lithium Americas Corp. are negotiating the terms of an agreement that would fund more than half of the cost of the Thacker Pass mine in Nevada. Photographer: Rick Bowmer/AP

• Dianne Feinstein, longest-serving female US senator, dies at 90.
• BlackRock CEO Larry Fink sees US 10-year yields topping 5%.
• Evergrande tycoon crossed a red line when wealth funds ran dry.
• Europe’s richest royal family builds a $300 billion finance empire.
• Getting a Master’s Degree may not pay off with a higher salary.
• Bloomberg Opinion: It’s too easy for rain to bring NYC to its knees.
• Bloomberg Opinion: Stop chasing airline loyalty status—go free agent.

The more a plane weighs, the more fuel it burns. Fuel and labor are the two largest expenses for airlines, with fuel accounting for about 25%. A new study shows that, for example, United Airlines would save $80 million a year if the average passenger weight fell by 10 pounds. Well, as luck would have it, there’s a new class of drugs that can help that happen. The report was part of a broader Jefferies analysis of public enthusiasm for one of the new weight-loss drugs—and potential beneficiaries of its use.

Photographer: Ore Huiying/Bloomberg

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