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The World
With a federal shutdown looming, House Speaker Kevin McCarthy “has embraced steep reductions to the U.S. safety net in an attempt to appease far-right Republican demands for lower spending.” The proposals include “cutting housing subsidies for the poor by 33 percent,” reducing federal home heating assistance by more than 70%, and “forcing more than 1 million women and children onto the waitlist of a nutritional assistance program for poor mothers with young children.” (Washington Post)
Senate negotiators of both parties “reached agreement on Tuesday on a stopgap spending plan that would head off a government shutdown on Sunday while providing billions in disaster relief and aid to Ukraine,” but the plan is unlikely to be acceptable to House conservatives. (New York Times)
McCarthy “is calling for a meeting with President Biden to discuss a path forward.” (Axios)
A Pentagon spokesperson said Tuesday that “over 1 million military members and furloughed civilian employees are at risk of going without pay during the shutdown period.” (CNN)
After Ukraine claimed to have killed Russian Black Sea Fleet commander Adm. Viktor Sokolov during a missile strike in Sevastopol, Russia’s Defense Ministry on Tuesday “released footage that appeared to show Sokolov alive, attending by video link a meeting chaired by Defense Minister Sergei Shoigu.” Ukrainian intelligence has not commented on the footage. (Washington Post)
Turkey will back Sweden's NATO bid if U.S. keeps promise on F-16 sale - Erdogan. Turkey's parliament will keep its promise to ratify Sweden's NATO bid if U.S. President Joe Biden's administration paves the way for F-16 jet sales to Ankara, President Tayyip Erdogan said on Tuesday, according to Turkish media. Speaking to reporters on his flight back from Azerbaijan's exclave of Nakhchivan, Erdogan said that Foreign Minister Hakan Fidan and U.S. Secretary of State Antony Blinken discussed Sweden's NATO membership bid last week in New York. The U.S. administration is linking F-16 fighter jet sales to Turkey with Ankara's ratification of Sweden's bid, Erdogan said. "If they (the U.S.) keep their promises, our parliament will keep its own promise as well. Turkish parliament will have the final say on Sweden's NATO membership," he said. (Reuters)
Canadian and Indian diplomats did not “directly address their countries’ row over the killing of a Sikh separatist leader” as they addressed the UN General Assembly, but they “obliquely underscored some key talking points.” Indian Foreign Minister Subrahmanyam Jaishankar said the world “must not ‘countenance that political convenience determines responses to terrorism, extremism and violence.’ Canadian U.N. Ambassador Robert Rae, by turn, insisted that ‘we cannot bend the rules of state-to-state relations for political expediency.’” (Associated Press)
“Canada’s spat with India is complicating efforts by the U.S. and other Western countries to counter China’s influence in the Indo-Pacific.” Some allies of Prime Minister Justin Trudeau “are calling for Ottawa to reconsider basing so much of Canada’s Indo-Pacific trade and security strategy on partnering with India — a key player in containing China’s power.” (Semafor)
North Korean UN Ambassador Kim Song “came out swinging in his speech to world leaders” at the UN General Assembly on Tuesday, accusing the U.S. “of making 2023 an ‘extremely dangerous year,’ saying its actions are trying to provoke a nuclear war and denouncing both U.S. and South Korean leaders for ‘hysterical remarks of confrontation’ that it says are raising the temperature in the region.” (Associated Press)
The U.S. is calling on Azerbaijan to protect the rights of civilians in Nagorno-Karabakh and allow access for international monitors and humanitarian organizations as thousands of ethnic Armenians flee the region. U.S. Agency for International Development Administrator Samantha Power “cited ‘very troubling reports’ of violence by Azerbaijani forces against civilians, and she called on President Ilham Aliyev’s government to ‘maintain the cease-fire and take concrete steps to protect the rights of civilians in Nagorno-Karabakh.’” (Washington Post)
Israeli Tourism Minister Haim Katz “arrived in Saudi Arabia for a United Nations conference, becoming the first Israeli minister to lead a delegation to the kingdom.” The visit “comes as Israel and Saudi Arabia seem to be edging closer to a normalization deal.” (Times of Israel)
The International Energy Agency says “keeping global warming under 1.5 degrees Celsius is still an attainable goal.” While the agency “says that the path to reaching that metric was shrinking, it believes that limiting warming below the benchmark is possible with an accelerated move to clean energy.” (Semafor)
Economy
President Biden became the first sitting president to join a picket line on Tuesday as he made “an extraordinary attempt to place himself on the side of striking union members against the country’s biggest auto manufacturers and make good on a promise to be ‘the most pro-union president in history.’” (Washington Post)
“General Motors did its best to ignore the president’s visit, saying in a statement: ‘Our focus is not on politics but continues to be on bargaining in good faith with the U.A.W. leadership to reach an agreement as quickly as possible.’” (New York Times)
“Biden has expressed full support for the United Auto Workers, as he vies for political support from unionized labor. Meanwhile, former President Trump plans to speak Wednesday in Michigan to current and former union members.” (Axios)
Another union, the United Farm Workers, is endorsing Biden for re-election, “declaring that another Biden presidency would be a win for labor rights and the ‘daily lives of farmworkers across America.’” (Los Angeles Times)
Target will close nine stores in New York, Portland, San Francisco/Oakland, and Seattle next month, citing violence, theft, and organized retail crime. Target said it has “taken a variety of steps to stop crime at its stores,” but at the affected stores, “a larger security team and theft-deterrent tools weren’t enough.” (CNBC)
Why the U.S. fiscal picture really is ugly. Most triple-A countries — think Germany or Canada — carefully plan out their fiscal trajectory over the next five to 10 years. The U.S. can't even credibly promise to pay its employees next week. As a result, it's now at risk of losing the last of its much-coveted triple-A credit ratings. Why it matters: America's economic and military might have combined to allow a level of fiscal complacency within its government that's incompatible with a risk-free rating. The big picture: The U.S. government has lost control of its own spending, both in the short term and in the long term. That was the message sent by Fitch when the ratings agency downgraded the U.S. last month, and it's the message that was sent Monday by Moody's as we hurtle toward a government shutdown on Oct. 1. The Fitch downgrade attracted plenty of criticism — and its timing was curious, coming right after a successful resolution of the debt limit. But the firm's analysts may have had a point. How it works: For U.S. government debt to be risk-free, the U.S. government has to be willing and able to service that debt and keep it under control. (Axios)
Problems inside South Africa’s state-owned ports and rail company Transnet “that threaten to plunge Africa’s most industrialized economy into a crisis played a key role in prompting plans to impose strict cost-cutting measures across government departments.” Transnet “is grappling with a shortage of freight trains and inefficient ports that has cut income from exports,” which one consultancy says could lead to “a loss to Africa’s second biggest economy in 2023 equivalent to 4.9% of gross domestic product.” (Semafor)
The Countries Committing to Nuclear Power: In the mid-term, nuclear power plants are considered by some experts to be the most efficient transitional solution for achieving global climate goals. Criticism is though leveled at the largely unresolved question of final storage and potential safety risks. As this infographic using data from the World Nuclear Association shows, no country is currently committing more to a nuclear future than China. The Asian superpower currently has 24 new nuclear reactors planned or being built, with one new power plant to be connected to the grid this year. The United Arab Emirates and Turkey are also planning to connect one new power plant each, and in South Korea there are two more in the pipeline for this year. In second place is India, which plans to have eight new nuclear power plants built and connected to the grid by 2027, followed by the aforementioned Turkey with four and South Korea with three reactors. What is noteworthy here is that with China, India and Russia, three of the five BRICS members are among the top eight. (Statista)
Technology
OpenAI is talking to investors about a possible share sale that would put its valuation between $80 billion and $90 billion, almost triple its level earlier this year. Open AI “has told investors that it expects to reach $1 billion in revenue this year and generate many billions more in 2024. OpenAI generates revenue mainly by charging individuals for access to a powerful version of ChatGPT and licensing the large language models behind that AI bot to businesses.” (Wall Street Journal)
How Microsoft is Trying to Lessen Its Addiction to OpenAI as AI Costs Soar. Microsoft’s push to put artificial intelligence into its software has hinged almost entirely on OpenAI, the startup Microsoft funded in exchange for the right to use its cutting-edge technology. But as the costs of running advanced AI models rise, Microsoft researchers and product teams are working on a plan B. In recent weeks, Peter Lee, who oversees Microsoft’s 1,500 researchers, directed many of them to develop conversational AI that may not perform as well as OpenAI’s but that is smaller in size and costs far less to operate, according to a current employee and another person who recently left the company. Microsoft’s product teams are already working on incorporating some of that Microsoft-made AI software, powered by large language models, in existing products, such as a chatbot within Bing search that is similar to OpenAI’s ChatGPT, these people said. (The Information)
The Federal Trade Commission and 17 states are suing Amazon, claiming that it “illegally wields monopoly power that keeps prices artificially high, locks sellers into its platform and harms its rivals.” FTC Chair Lina Khan “is a longtime critic of Amazon who wrote in the Yale Law Journal in 2017 that earlier generations of competition cops and courts abandoned the law’s concerns over conglomerates such as Amazon.” (Wall Street Journal)
“61% of American voters believe that the government should not regulate Amazon's monopoly practices if the company can provide better services at the expense of competitors, according to a poll conducted by Chamber of Progress, a trade organization funded by Amazon and other tech companies like Meta.” (Semafor)
“In the two years since Andy Jassy replaced Jeff Bezos as Amazon’s chief executive, he has been cleaning up after his company’s aggressive pandemic expansion and after Mr. Bezos. … On Tuesday, he was handed another challenge.” The redacted FTC complaint “mentions Mr. Bezos 16 times, and Mr. Jassy only twice.” (New York Times)
“The five most eye-opening lines in the Amazon lawsuit” (Politico)
Federal Communications Commission Chair Jessica Rosenworcel announced plans to restore net neutrality rules. Rosenworcel announced the plan to restore the rules “one day after the FCC gained a 3-2 Democratic majority with the swearing-in of Commissioner Anna Gomez.” (Ars Technica)
“The new proposal is meant to closely follow the 2015 rules, which a fact sheet from Rosenworcel’s office refers to as ‘successful.’ In the years since their repeal, net neutrality has largely been a state-by-state issue, with individual states like California passing piecemeal rules in the absence of a federal law.” (The Verge)
SAG-AFTRA members have voted to authorize a strike against 10 of the biggest U.S. video game companies. Video game voice actors “have been pushing to renegotiate a contract with big gaming studios for over a year. Their previous contract expired last November.” (Axios)
U.S. and South Korean companies are partnering to build an electric vehicle battery recycling facility in Kentucky. The $65 million venture in Hopkinsville will create about 60 jobs and “will supply material for a separate battery-related operation in the same town.” (Associated Press)
Battery VC Investment Gets Supercharged. Lately, it seems like battery startups are powering up with giant funding rounds at an unusually rapid pace. In roughly the past month alone, we’ve seen three financings of more than $1 billion: Verkor, a French startup focused on low-carbon battery manufacturing, raised $2.1 billion in debt and equity financing this month, including a $900 million Series C. For 2023, global funding is on track to exceed both 2022 and 2021 levels, per Crunchbase data. (Crunchbase)
Smart Links
The S&P 500 Information Technology Index is down more than 10% from its July high. (Bloomberg)
Sales of newly built homes fell 8.7% in August from July to a seasonally adjusted annualized pace of 675,000 units, the slowest pace since March. (CNBC)
China Puts Evergrande’s Billionaire Founder Under Police Control. (Bloomberg)
McKinsey pays out another $230mn to settle opioid cases. (Financial Times)
Peloton’s last remaining co-founder is leaving the company. (Bloomberg)
How the Post Office could decide the presidency in 2024. (The Independent)