Government Shutdown Deadline; Fed Fueled Selloff on Wall Street
Bloomberg Daybreak: US Edition
Deep Dive
Why is the government shutdown deadline approaching?
The government shutdown deadline is approaching because the stopgap spending bill agreed upon by lawmakers is now dead. President-elect Donald Trump opposed it and threatened to oust Republicans who don't meet his demands, leading to a lack of agreement and a return to negotiations.
What are President-elect Trump's demands regarding the funding bill?
President-elect Trump demands a streamlined bill that excludes sweeteners like $100 billion for disaster relief and $10 billion for farmers. He also wants a vote on raising the debt ceiling now, under Biden's watch, rather than during his presidency.
What caused the recent sell-off on Wall Street?
The recent sell-off on Wall Street was fueled by the Federal Reserve's decision to scale back the number of rate cuts expected in 2025 to two. Chair Jerome Powell emphasized that future easing would require fresh progress on inflation, which has underperformed relative to expectations.
How did the Fed's decision impact market expectations?
The Fed's decision to reduce the number of expected rate cuts in 2025 surprised markets, which had hoped for a more accommodative stance focused on labor rather than inflation. This shift created a less favorable environment for risk-taking, leading to significant market declines.
Why are Micron's shares plunging?
Micron's shares are plunging by 14.5% due to its second-quarter revenue forecast missing projections by about $1 billion. The company is facing sluggish demand for smartphones and personal computers, which has hurt its sales outlook.
What is the significance of Apple's potential deal with Indonesia?
Apple is close to getting Indonesia to lift its ban on iPhone 16 sales after the country's president approved a $1 billion investment from the tech giant. The ban was initially imposed because Apple failed to comply with domestic content requirements for smartphones and tablets.
What are the key issues in the Amazon warehouse workers' strike?
Amazon warehouse workers and contract drivers in four states are striking after the Teamsters union called on Amazon to recognize its units and negotiate a contract. Amazon claims the union has misled the public and threatened workers, while the union says the company ignored their demands.
What is the impact of the Fed's inflation outlook on monetary policy?
The Fed's inflation outlook has shifted significantly, with 15 of 19 officials now seeing a higher risk that inflation will exceed expectations. This marks a massive change from September, when only three officials held this view, influencing a more cautious approach to future rate cuts.
What are the implications of the Bank of England's expected rate decision?
The Bank of England is expected to hold interest rates steady, but economists predict scope for rate cuts in 2025, potentially reducing rates to 3.75%. This cautious approach reflects ongoing inflation threats both domestically and globally.
Why did San Francisco lose its top-tier credit rating?
San Francisco lost its top-tier credit rating from S&P Global Ratings due to a projected $876 million deficit over the next two years and weakened business and property tax growth. These factors contributed to the downgrade.
- Stopgap spending bill rejected by President-elect Trump
- Government shutdown possible by end of week
- Negotiations stalled, no agreement reached
- Debt ceiling vote demanded by Trump
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