Shutdown, Strikes, Sticky Inflation, and More… Brace for a Bumpy Fourth Quarter.

But just as night follows day, Powell’s talk of good news raises the question of what the bad news is that goes along with it. There are at least five things that threaten to make the fourth quarter messier than the year so far.

The first is higher interest rates. The Fed may have kept rates on hold last week, but it managed to jolt markets into finally believing borrowing costs are going to stay higher for quite a while. The repricing for the longer term—markets and the Fed expecting fewer rate cuts next year—is still happening and will impact the wider economy.

Second, oil prices are creeping up again. Predictions that crude will return to $100 a barrel are everywhere, and that will hit consumers.

Then there’s the restart for student loan payments. That could take $100 billion out of shoppers’ pockets starting Oct. 1.

The prospect of a government shutdown isn’t helping, either. The chaos and confusion created by such an event is likely to hit confidence if nothing else. And there’s the auto workers strike, which has now expanded.

Add it all up and it’s easy to see why Powell isn’t making a soft landing is his base case scenario. Maybe investors shouldn’t, either.

—Brian Swint

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House GOP Scrambles to Avert Looming Government Shutdown

House Speaker Kevin McCarthy was optimistic over the weekend about avoiding a government shutdown on Oct. 1, telling reporters at the Capitol there were still several days to go. But lawmakers will have to scramble this week to put together at least a temporary funding extension.

• House GOP leaders are trying to convince holdouts to get behind a handful of bills, including some that fund for the full year and one that is a short-term fix to buy time to get agreement on a full-year budget. A shutdown could furlough hundreds of thousands of workers.

• It’s unclear whether McCarthy has the votes to go forward this week. The holdouts blocked similar legislative efforts last week, and some Republican lawmakers told the Sunday morning talk shows they could not support a temporary funding measure known as a continuing resolution.

• On Tuesday, House members are expected to vote on a rule concerning four bills, one for defense spending, one to fund Homeland Security, one for the State Department and another for agriculture. Then, McCarthy will focus on a short-term funding deal.

• Transportation Secretary Pete Buttigieg told NBC on Sunday that the Biden administration’s focus is getting House Republicans to live up to a spending deal they reached with the White House earlier this year.

What’s Next: A shutdown could also delay some major economic data such as the September jobs report, and the closure of some institutions such as the Smithsonian museums in Washington, D.C., which had to close during the last shutdown in 2018-19.

—Liz Moyer

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Hollywood Writers Reach Deal to End Strike

Hollywood writers, studios, and streamers have reached a tentative agreement to end the monthslong strike that has shut down production of TV shows and movies.

• The two sides said they have reached a deal in statements late Sunday, without giving further details. The Writers Guild of America (WGA) union said the agreement “is exceptional—with meaningful gains and protections for writers in every sector.”

• The deal is for three years and includes increased royalties for writers, minimum staffing for writers, and protections against the use of artificial intelligence, The Wall Street Journal reported.

• The breakthrough in negotiations came after five consecutive days of talks that involved the chief executives of Warner Bros. Discover, Disney, Netflix, and NBCUniversal Studios.

• In earnings reports over the past few weeks, studios said the strike had been saving them money in the short term, but that it would be damaging in the longer term when they have less content.

What’s Next: Writers will only return to work once details of the agreement have been hammered out and approved. The tentative deal for writers could pave the way for a resolution for actors as well, who started their own strike in July.

—Brian Swint

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Biden Joining Auto Workers on Michigan Picket Line

President Joe Biden will join the United Auto Workers on their picket line Tuesday in Michigan, a show of solidarity with labor as their strike against Detroit’s Big Three auto makers continues. He announced the plan as the union expanded the strike to more facilities at
General Motors
and
Stellantis.

• More than 5,000 employees walked off the job on Friday at 38 GM and Stellantis distribution centers. UAW President Shawn Fain said the union isn’t striking more
  Ford
  facilities because of progress in talks. Unifor, the Canadian auto workers, said Sunday members ratified a new Ford contract.

• About six in 10 union members supported Biden in the 2020 election, the Associated Press’ Vote Cast said. The UAW hasn’t officially endorsedBiden’s re-election campaign but Fain invited Biden to join the picket line. Former President Donald Trump plans to visit Michigan on Wednesday.

• Stellantis said it offered UAW members 21.4% compounded wage hikes over five years, giving full-time hourly workers $80,000 to $96,000 annually by the end of the contract, and $1 billion more for retirees. GM called the strike expansion “unnecessary.”

• GM said that UAW’s strike escalation on top of the Wentzville assembly plant in Missouri is now affecting more than 3,000 employees, and that it has offered five proposals addressing wage increases and job security.