Good morning. I was talking to a CEO by phone yesterday about the potential business impact of a government shutdown when the news broke that the White House is withholding $18 billion in federal infrastructure funds to New York City. “Whoa! Look at this,” he said, reading out allegations that the city has “discriminatory, unconstitutional” contracting processes. “If you work with the government, that could be more significant.”
Maybe. The impact of a shutdown will, of course, depend on its length and the reaction of those impacted. Investors aren’t happy, but that could pass. While roughly three-quarters of federal employees are classified as “essential” workers who must stay on the job, some may stop showing up if they’re not paid. As another CEO pointed out yesterday, a raft of no-show TSA workers can make for annoying security lines but a dozen “sick” air traffic controllers can seriously disrupt air travel.
The U.S. has weathered 10 shutdowns since the current budget policy was established in 1976.
One difference this time around is that DOGE cuts and policy shifts have already disrupted various aspects of government operations, from education grants to public health programs, making yesterday’s “orderly shutdown” yet another challenge to navigate. The main message from CEOs I reached yesterday: Check back in a week or two.
While CEOs are keeping an eye on the economic impact of a shutdown, they have to stay focused on growing their business, recruiting top talent and leveraging or developing breakthrough technologies in areas from clean energy to AI. That’s why gatherings like the Fortune Global Forum in Riyadh on the 26th and 27th of this month are so important. It’s an opportunity for leaders to learn and connect around shared challenges and opportunities. Among the CEOs joining us are Qualcomm’s Cristiano Amon, Masdar’s Mohamed Jameel Al Ramahi, Delta’s Ed Bastian, Abhijit Dubey of NTT Data, Mary Callahan Erdoes of JPMorgan Chase, JLL’s Christian Ulbrich, Bill Winters of Standard Chartered, Cohere’s Aidan Gomez, Nokia’s Justin Hotard, Tony Han of WeRide, Jenny Johnson of Franklin Templeton, Zimmer Biomet’s Ivan Tornos, Tan Su Shan of DBS Group, Gilberto Tomazoni of JBS, Jonathan Ross of Groq and many more. You can check out more about the upcoming forum here and click here to apply to attend.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
Top news
Trump uses shutdown to cut spending, fire workers
“Republicans must use this opportunity of Democrat forced closure to clear out dead wood, waste, and fraud. Billions of Dollars can be saved,” the president said on Truth Social. White House budget director Russell Vought said $26 billion in funding for previously approved programs was on hold, much of which had been earmarked for Democrat-led states or cities. Permanent layoffs are expected to begin the in the next day or so. The White House is using government agency web sites to refer to the shutdown as “Democrat-led.”
U.S. to provide intelligence for long-range strikes on Russia
More evidence that Trump’s break with Putin is serious: The WSJ reports that the White House has approved sharing intelligence with Ukraine that will help Kyiv conduct long-range strikes deep into Russia, potentially targeting the oil and power infrastructure that fuels the invasion of Ukraine. Washington is also considering sending Ukraine long-range missiles but has not made a final decision.
Supreme Court delays decision on Fed’s Cook
The high court ruled that it will not take up Fed Governor Lisa Cook’s lawsuit against President Trump until January, after lower courts have dealt with the case. The move is a potential signal that the court is skeptical that the White House has the legal right to fire her.
PIMCO: There are “cracks” in the corporate credit market
PIMCO President Christian Stracke told CNBC that the private credit market for companies seeking debt funding was going through a difficult patch. “We’re seeing some real problems in the credit markets. There have been some high-profile defaults in the credit markets — in the public markets — where it’s very difficult for the company to negotiate with the lenders to preserve value in the company,” he said.
The turnaround at Ralph Lauren
Ralph Lauren was staring irrelevance in the face when Procter & Gamble veteran Patrice Louvet took over as CEO and brought the fashion brand back to its luxury roots. Now, with profits at a 13-year high, Louvet says “It’s got to stay fresh.”
Two weeks of bro-co-CEOs
In just the past two weeks, three large companies—Spotify, Oracle, and Comcast—either added a co-CEO to their corner office or replaced their CEO with a leadership duo. Fortune’s Lila MacLellan describes the phenomenon as the “rise of the bro-co-CEO.”
Citi mandates AI training for most employees
Citi is mandating AI training for the majority of its 229,00 employees, according to an internal memo shared with American Banker. A Citi representative told Fortune that “This training is about teaching our colleagues the possibilities of great prompting versus basic prompting to generate impactful results.”
OpenAI officially worth $500 billion
Sam Altman’s AI company has completed a funding round that values his company at a higher level than SpaceX, making it the world’s most valuable startup.
Bitcoin treasury craze cools
Companies that diluted their stock by selling shares specifically to fund purchases of Bitcoin have seen their values tumble by 20% to 50%, according to the WSJ. While their valuations remain above the price of Bitcoin on their balance sheets, it seems the market is not willing to buy an endless number of self-diluting Bitcoin treasury companies. Michael Saylor’s Strategy fell 20% in Q3.
The markets
S&P 500 futures were up 0.16% this morning. The index closed up 0.34% in its last session. STOXX Europe 600 was up 0.7% in early trading. The U.K.’s FTSE 100 flat in early trading. Japan’s Nikkei 225 was up 0.87%. China’s CSI 300 was up 0.45%. The South Korea KOSPI was up 2.7%. India’s Nifty 50 was up 0.92% before the end of the session. Bitcoin rose to $118.6K.
Around the watercooler
Walmart now plans to bring drone deliveries to ‘most areas that we operate in’, exec says by Jessica Mathews
The economy is just getting stronger, not weaker, and ‘we in the economics profession need to look ourselves in the mirror,’ top analyst says by Nick Lichtenberg
22-year-old AI CEO behind ‘friend.com’ necklace welcomes graffiti on his $1 million ad campaign: ‘Capitalism is the greatest artistic medium’ by Eva Roytburg
CEO Daily is compiled and edited by Joey Abrams and Jim Edwards.
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