Good morning.
Today: Congress has until 12.01 a.m. tonight to reach a deal to avoid a government shutdown. President-elect Trump and Elon Musk cajoled Congress into rejecting a bipartisan deal on Wednesday, and Congress then rejected a second, smaller funding extension bill on Thursday. Crucially, the second deal was supported by Trump — setting up a dramatic showdown today.
The markets: Both the S&P 500 and the Nasdaq closed incrementally down yesterday, consolidating brutal losses from the day before after the Fed signalled it would deliver fewer interest rate cuts in 2025 than previously expected. US futures are pointing to more losses at the open this morning.
Inflation: The Bureau of Economic Analysis will release an update on the Fed’s favorite inflation index, personal-consumption expenditures (PCE), at 8:30 a.m. ET this morning, which will give us a progress report on how the fight against inflation is going.
CEOs shrug off Fed signal at Yale summit
You’d think that the Fed’s interest rate announcement and subsequent market reaction — stocks tanked 3% or more immediately afterward — might have dampened the mood among attendees at the Yale CEO Summit earlier this week. But the leaders who gathered at the invitation-only, off-the-record gathering largely shrugged off the Fed’s 0.25 percentage-point rate cut and its hints at fewer cuts to come.
“I think tariffs and trade policy are more likely to boost inflation,” said one CEO. “Technology and policy are more likely to boost growth.” Another predicted that the “interest rate won’t even be remembered among all the things that are going to impact the economy, our country, and the world.”
Added a third: “Anything that impacts borrowing costs is going to matter, but a lot of rate-dependent shifts are baked in. The economy is growing, and nobody thinks we’re going back to the days of free money. The critical variable is Trump.”
Prof. Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute, who convenes and hosts the gathering, agrees. He argues that the Fed response “foreshadows a wise concern that America’s top CEOs share regarding the certain inflationary impact of President-elect Trump’s promised mass deportations of 11 million undocumented workers, many critical to the workforce of over half the nation’s agriculture and construction industries.” Add in the prospect of higher tariffs and lower taxes and “the Fed is acting with prudence, wisdom, and integrity taking Trump at his word on his immediate plans for Q1 2025.”
Sonnenfeld noted that several key Trump allies — like Vivek Ramaswamy, Stephen Moore, Ralph Reed and Jay Clayton — came to the event. CEOs also debated the merits of traveling down to Mar-a-Lago. “Regardless of whether they go to Mar-a-Lago, everyone recognizes that they have to forge a constructive relationship with the new president,” he said.
As one former CEO put it: “This could be the best of times or the worst of times. It all comes down to one man.”
And check out Eleanor Pringle’s interview with Boston Fed President Susan Collins.
Also on our radar today:
• Trump is trying to force the EU to buy American oil and gas whether they like it or not. If they don’t he’ll impose trade tariffs, he posted on Truth Social early Friday: “I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”
• China’s Xi Jinping urged Macau to diversify beyond gambling.
• Polymarket, the crypto betting platform that correctly called Trump’s election victory, put the odds of a government shutdown at 69% this morning.
• Hock Tan, CEO of Broadcom, says the AI frenzy will continue for the rest of the decade.
• Goldman Sachs CEO David Solomon sat down for a conversation with Nicolai Tangen, CEO of the largest sovereign wealth fund in the world. Norges Bank Investment Management, with $1.8 trillion under management, owns about 1.5% percent of all the world’s listed companies.
More news below.
Diane Brady
diane.brady@fortune.com
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Matt Garman’s ‘unflappable’ defense of Amazon’s $100 billion AI profit machine
Garman was appointed CEO of AWS six months ago, overseeing Amazon’s cloud business. He’s under pressure to ensure that it keeps up with the massive changes in demand coming from artificial intelligence.
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Moynihan wants to stay a while
Bank of America CEO Brian Moynihan indicated in a recent town hall that he wants to remain at the top of the bank until its stock makes the leap to $100 per share from its current price of $43.50, per Bloomberg. If this takes place, the 65-year-old would likely outlast JPMorgan CEO Jamie Dimon, who’s departure is less than five years away.
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