Good morning. US stock futures moved lower in Monday morning trading as investors closely monitor progress on a budget resolution in Washington.

"People tend to sell winners and hang on to their losers. The psychology of that is quite straightforward"

Daniel Kahneman

Top News

US government faces shutdown possibility

WHAT: Oh snap! It’s that time again as the good ole’ US government shutdown tango is back! US House Republicans, fueled by hard-right demands for deep spending cuts, showed no signs of coming together to pass a stopgap spending bill that would prevent the federal government from running out of money by October 1, and effectively avoid a government shutdown.

WHY: A shutdown happens when Congress fails to pass some type of funding legislation. When no funding legislation is enacted, federal agencies have to stop all non-essential work and will not send paychecks as long as the shutdown lasts.

EU exec: We must protect ourself

WHAT: The European Union (EU) isn’t looking for a “breakup” with China, but according to the bloc’s Executive Vice President Valdis Dombrovskis, it needs to “protect itself” when its openness is abused. Dombrovskis was delivering remarks as part of a four-day trip to China designed to cool rising tensions over trade, foreign investments and geopolitics.

WHY: The bloc posted record bilateral trade with China last year — a trade deficit to the tune of almost 400 billion euros. The EU blames its 400 billion euro trade deficit partly on Chinese restrictions on European companies.

We’ve got a deal…sorta…

WHAT: Looks like Hollywood writers and the big studios are putting down their pens and swords to hash out a deal! The Writers Guild of America announced it had reached a preliminary agreement with major studios — a deal expected to end one of two strikes that have halted film and television production and cost the California economy billions of dollars.

WHY: Writers walked off the job on May 2 after negotiations reached an impasse over compensation, minimum staffing of writers’ rooms, the use of artificial intelligence and residuals that reward writers for popular streaming shows, among other issues.

In Other News

Apple to ramp up production in India

WHAT: Apple’s got big dreams in India and they’re not playing around! According to reports from the Press Trust of India (PTI), the company plans to increase production more than five-fold in the next five years. The company surpassed $7 billion in production in the country in the last financial year, and is aiming for $40 billion by 2028.

WHY: Apple manufactures iPhones in India and has plans to start making Airpods in the country in 2024 PTI added.

Meat plants under investigation over child labor allegations

WHAT: The US Department of Labor is putting on its detective hat and investigating Tyson Foods and Perdue Farms over allegations that migrant child labor was used to clean slaughterhouses. The investigation, sparked by a New York Times article, alleges that migrant children were found working overnight shifts in the companies’ plants in Virginia.

WHY: In April, the Biden administration sent letters to meat companies, including Tyson and Perdue, to examine their supply chains for evidence of child labor.

Not-so-green Lego…

WHAT: Lego tried to kick its plastic habit, but it turns out its “eco-friendly” alternative was a bit of a carbon party crasher! The company said that bricks made from recycled polyethylene terephthalate (RPET) would lead to higher carbon emissions than its current oil-based plastic bricks.

WHY: Lego kicked off efforts in 2020 to replace its plastic bricks with sustainable materials. The difficulty however, involved finding a material that would be environmentally-friendly, but also give the same color, shine and sound of an oil-based plastic brick.

Key Economic Events

• Monday - No Major Economics News

• Tuesday - Consumer Confidence Index

• Wednesday - US Trade Balance

• Thursday - US GDP Q-o-Q

• Friday - U. Of. Michigan Consumer Sentiment

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