Tuesday's Scoop: Anxious🌤️

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Here’s what you need to know today…

1. Congress has until Friday to avert a government shutdown.

2. The US manufacturing sector has taken a turn for the worse.

3. Remote workers are getting passed over for promotions.

S&P 500: 4,765.98
1Mo: +1% | 1Yr: +19% | 5Yr: +78%

The market drifted lower today as investors returned from the long weekend to more economic concerns. Policymakers keep warning that interest rate cuts won't come quickly, but the economy shows signs of slowing.

Congress faces another government shutdown on Friday. Each year, Congress is responsible for determining the year’s spending across each branch of government by October 1st. If no budget has been approved by the House, Senate, and President by then, no more money can be spent, and parts of the government start shutting down. This affects a wide variety of services, from boring to vital. Congress passed a Continuing Resolution in October to maintain spending at last year’s budget, keeping the government running and providing another six weeks to negotiate the new budget. They kicked the can down the road again in November. Now, the most likely deal by Friday is another Continuing Resolution, pushing budget decisions into March, five months late. It’s not encouraging for next year’s budget that they’ll have to finalize within seven months after that.

The US manufacturing sector is not looking good. The New York Fed Empire Manufacturing Index measuring business conditions plunged to the lowest level since the pandemic, lower than any period during the Great Financial Crisis of 2007-2009. Business activity, factory orders, and shipments dropped sharply in the New York area. We’ll see more reports from other regions in the coming weeks, but the industry has been in a recession for the past year. Manufacturing makes up about 10% of the economy.

Remote workers are getting passed over for promotions. In an analysis of two million workers over the past year, fully remote employees were promoted 31% less frequently than those who showed up in person. This can be particularly harmful for women, who tend to work remotely at higher rates than men. The data comes from Live Data Technologies analyzed by the Wall Street Journal.

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Wall Street bank business models can be opaque and confusing. They mainly earn revenue from lending, managing investments, executing trades, and brokering corporate deals.

The traditional banking business model entails taking deposits, paying some interest to the depositor, and then lending that money to someone else at some higher interest rate. Banks profit from the spread between the rate they pay the depositor and what they earn from their loans.

Investment banking isn't actually the investing arm of the bank. Investment banks assist companies with large transactions, earning fees for their advice. In the same way that a real estate broker earns a commission for helping sell your house. Investment banks earn a hefty commission for helping you value and sell your company to other companies or the public (IPO).

The investing arm of the bank is called asset or wealth management. These divisions earn fees to oversee clients’ money, provide advice, and invest on their behalf.