| Good morning. US equities look set to start a key week on a downbeat note, Chinese stocks extend a remarkable turnaround and automakers are seeing a run of bad news. Here's what traders are talking about. — David Goodman Want to receive this newsletter in Spanish? Sign up to get the Five Things: Spanish Edition newsletter. Most global stock markets started the week on a downbeat note, with US futures pointing to losses and European indexes falling. The moves come before a crucial week for the US, seeing Federal Reserve Chair Jerome Powell discussing the economic outlook as well as the latest patch of payrolls data. Both could be key for the prospects of another large interest-rate cut in November. A solid US jobs report could spur a rotation from the market's most profitable names into stocks with weaker earnings, according to Goldman Sachs. The drop comes despite Chinese stocks extending one of their most remarkable turnarounds in history on Monday, soaring for a ninth straight day as government stimulus entices investors back to one of the most beaten-down markets worldwide. The CSI 300 Index jumped 8.5% Monday, the most since 2008, as traders rushed to buy shares in the last session before a week-long holiday. Iron ore, meanwhile, is reaping the rewards of China's actions. spiking more than 11%. The renewed optimism about China might come too late for the world's automakers, who have issued a slew of profit warnings in recent days, partly blaming sluggish demand from Chinese markets. On Monday, Jeep producer Stellantis fell 7.4% after cutting its profit margin forecast. Aston Martin Lagonda Global Holdings slumped 14% and Volkswagen dropped after its second profit warning in three months. Investors conflicted over the outlook for the US dollar are increasingly favoring trades that avoid the world's reserve currency. From shorting the Swiss franc against the Japanese yen, to buying the British pound against the New Zealand dollar, there's been an increase in trade recommendations over recent weeks that stand to profit irrespective of how Federal Reserve policy and the US elections impact the greenback. Germany's government is poised to cut its prediction for Europe's biggest economy and now expects no expansion at all this year, Bloomberg's Michael Nienaber reports. German bonds held losses, although the two-year yield remains near the lowest level since 2022. The gloomy outlook for the continent in general has seen the market boost bets on a rate cut from the European Central Bank in October, with traders now seeing a roughly 80% chance of a quarter-point reduction. This is what's caught our eye over the past 24 hours. On Sept. 20th, Microsoft announced an agreement with Constellation Energy to restart a nuclear reactor at Three Mile Island that had been mothballed since 2019. Microsoft gets clean power for its ongoing expansion of datacenters, while Constellation gets a guaranteed buyer of electricity alongside various tax credits (from the Inflation Reduction Act) to juice the math. Shares of Constellation are up over 20% since the news. On the Odd Lots podcast today, we spoke with return-guest Jigar Shah, the head of the Loan Programs Office at the Department of Energy, about the deal. We talk about general trends creating the renewal of enthusiasm for nuclear, including tax policy changes and the return of overall load growth. But a key dynamic he's excited about is that stock chart above. Constellation has not been in the business of building nuclear reactors. It's in the business of running nuclear reactors. Turning back on an old nuclear reactor is a risk. It costs money. It could cost more money than they expect if they don't get the engineering and operations right. But anyway, here's the market giving its thumbs up to a potentially risky deal (even with Microsoft as a guaranteed buyer). Why the stock market matters is that the reactor being turned on at Three Mile Island is not alone. There are nuclear sites around the country that have capacity for more reactors being built on them, should the demand arise. One way of looking at the stock chart is the market telling Constellation that it wants to see it sign more of these deals. And this is a key thing here. By and large, it's been a long time since we built nuclear in this country and there is a dearth of practice, experience, and labor. Nuclear is costly. And if there's ever going to be a proper revival, we need to bend the cost curve down. And the only way to do that is to build project after project. One way of looking at the above chart is that investors want to see exactly that, project after project getting built.
Find the episode on Spotify, Apple, or elsewhere. Joe Weisenthal is the co-host of Bloomberg's Odd Lots podcast. Follow him on X @TheStalwart Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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