Good morning. US stock futures moved lower in Friday morning trading as Wall Street continues to monitor moves from the Federal Reserve on the direction of interest rate policy.

"Being right doesn’t lead to superior performance if the consensus forecast is also right"

Howard Marks

Top News

US banking industry not out of the woods yet…

WHAT: Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg just spilled the beans on the US banking industry: US banks are in a pickle thanks to inflation and sky-high interest rates. The top regulator issued his warning as the FDIC released a comprehensive look at how thousands of institutions fared during the second quarter of 2023.

WHY: Banks on the FDIC’s problem list typically have multiple weaknesses identified by regulators in confidential supervisory ratings. They can be seized and shut down unless the issues are resolved quickly.

World Bank, IMF talk deeper cooperation on global issues

WHAT: Cooperation makes it happen! This seems to be the key theme to the latest actions by the International Monetary Fund (IMF) and World Bank as they issued a rare joint statement pledging to harmonize their efforts to combat climate change, tackle debt challenges and assist countries in their digital transitions.

WHY: The IMF and World Bank have worked closely on debt sustainability issues in the past, both pushing for improved restructuring frameworks.

Union rejects GM wage offer setting up potential strike

WHAT: To say that the United Autoworkers Union (UAW) isn’t pleased with General Motors (GM) might be a bit of an understatement. UAW President Shawn Fain called the car manufacturers latest offer of a 16% pay raise for top wage earners in its plants and 56% increase for newer employees who make less “insulting” in an immediate response to GM’s offer.

WHY: The pay raise is slightly higher than what rival Ford offered the union, but is still well short of the 46% raise that would result from the UAW’s opening bid.

In Other News

Microsoft: We’ve got your backs customers!

WHAT: Microsoft has thrown on its legal superhero cape, promising to foot the bill for customers’ copyright infringement lawsuits related to AI-generated content. The company said it would assume responsibility for the potential legal risk arising out of any claims raised by third parties so long as customers use “the guardrails and content filters” built into its products.

WHY: Microsoft is staking its growth on generative AI — building on its investment in ChatGPT-maker OpenAI — and has incorporated the technology in a wide array of its products, including cloud services, search and enterprise productivity software.

CFPB head: Apple, Google “choke points” in payment system

WHAT: Consumer Financial Protection Bureau director Rohit Chopra just called out Apple and Google for acting as “choke points” to the US payments system by cutting off innovation and keeping others out. Speaking at a FinTech conference in Philadelphia, Chopra said “regulations imposed by Big Tech firms have an impact on whether consumers and businesses can make payments using third party apps”

WHY: Apple and Google set regulations that govern app developers ability to integrate near-field communication technology (NFC) into their apps which is needed to execute the tap-to-pay transactions.

Bank goes after wealthy clients with AI chatbot

WHAT: Morgan Stanley’s got a quirky surprise to woo new wealthy clients: forget cozy chats with financial advisers, and say hello to a chit-chat with a chatty chatbot! After experimenting with 1000 financial advisers, they’re unleashing an AI chatbot crafted in cahoots with the makers of ChatGPT, OpenAI.

WHY: The AI initiative is part of Morgan Stanley’s strategy to drive its wealth division, where net revenue surged 16% to a record in the second quarter and new client assets grew to $90 billion.

Key Economic Events

• Friday - Baker Hughes Oil Rig Count, Fed’s Barr Speaks

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