“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” ― Warren Buffett

1. Standoff in Congress Brings Government to Brink of Shutdown — House Speaker Kevin McCarthy (R., Calif.) rebuffed a bipartisan short-term funding bill from the Senate in favor of a House Republican plan driven by conservatives, as dim prospects for a deal raised the likelihood of a partial government shutdown starting this weekend.
Many lawmakers now anticipate that Congress will fail to fund the government past Sept. 30, a lapse that will partially close federal agencies and temporarily withhold pay for federal workers and active duty-military personnel. Both the House and Senate are moving ahead with their own stopgap proposals intended to keep the government open while work continues on full-year funding legislation. Each plan is considered a nonstarter in the other chamber, however, with sharp differences on spending levels, Ukraine and border security.
2. UAW Threatens More Strikes as GM, Stellantis Try to Keep Repair Parts Flowing — the United Auto Workers union pledged to widen its strike on Friday barring significant progress in talks with Detroit carmakers, as the companies take steps to keep critical parts flowing to their dealerships. Parallel talks between the UAW and General Motors, Ford Motor F -0.32%decrease; red down pointing triangle and Chrysler-parent Stellantis STLA -0.16%decrease; red down pointing triangle continued, a union official said Wednesday, nearly two weeks into a limited strike at all three automakers. The UAW official said the union would identify new strike targets at 10 a.m. Friday, with walkouts to begin at noon, unless bargainers make headway in negotiations for new four-year contracts. Last week, the UAW expanded the strike beyond three assembly plants—one at each company—to include 38 parts-distribution centers owned by GM and Stellantis. The union spared Ford from more walkouts, saying it was making progress in contract talks with the automaker.
3. Underlying Prices Cooled in August, Giving the Fed More Evidence of Softer Inflation — the Fed’s preferred inflation gauge, the personal-consumption expenditures price index, rose a seasonally adjusted 0.4% last month, largely reflecting energy costs. Core prices, which exclude food and energy, rose just 0.1% in August, the weakest monthly increase since 2020, the Commerce Department reported.
Over the three months through August, core prices rose at a 2.2% annualized rate. If that trend continues in the coming months, inflation would be running very close to the Fed’s 2% target. But higher energy prices pushed up overall inflation last month, highlighting why officials aren’t ready to declare victory.
4. UAW Expands Strike to GM Plant in Michigan, Ford Factory in Chicago — UAW President Shawn Fain said during a livestream address Friday that Chrysler-parent Stellantis STLA -0.73%decrease; red down pointing triangle would be spared from further walkouts for now, saying the company delivered a proposal that made significant progress on the union’s demands, including cost-of-living adjustments. The new walkouts would add nearly 7,000 workers to the roughly 18,000 UAW members on strike across the three companies, at three assembly plants and dozens of parts-distribution facilities. The Detroit companies combined have about 146,000 union workers.
5. McCarthy’s Bill to Avoid Government Shutdown Defeated in House — the bill failed in the Republican-led House with 198 in favor and 232 against, with 21 GOP lawmakers joining all Democrats in voting No. The defeat marked the latest embarrassing floor setback for McCarthy and underscores the bind facing GOP leadership. With a narrow 221-212 Republican majority in the House, McCarthy has repeatedly crafted legislation to win over the hard-line conservatives in his conference—only to see the bills fail anyway. The intraparty deadlock has left Republicans with no clear path forward, sidelined any talks with Democrats and put McCarthy’s job at the top of the party in peril. The McCarthy proposal would have extended government funding through Oct. 31, but at a $1.471 trillion annual rate, down from $1.6 trillion in fiscal 2023. The bill also included strict new border-security measures and the creation of a fiscal commission charged with coming up with ways to balance the budget and improve the country’s fiscal outlook.

In addition to the above events, the following economic data releases also had an impact on the market last week:

— ISM Manufacturing PMI: The ISM Manufacturing PMI for September was 49.8, below the consensus forecast of 50.2. This suggests that the manufacturing sector is contracting.
— ISM Services PMI: The ISM Services PMI for September was 53.6, above the consensus forecast of 53.2. This suggests that the services sector is still expanding, although at a slower pace than in previous months.
— Nonfarm payrolls: The US economy added 170,000 jobs in September, below the consensus forecast of 187,000. However, the unemployment rate remained at 3.7%, its lowest level since 1969.