| I'm Laura Curtis, an economics editor in Los Angeles. Today we're looking at the risk of a major US pre-election strike. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X via @economics. And if you aren't yet signed up to receive this newsletter, you can do so here. - The euro area's private-sector economy shrank for the first time since March, according to purchasing managers.
- China cut a short-term policy rate and announced a rare briefing with three top officials, raising stimulus bets.
- Federal Reserve official Neel Kashkari backs another half percentage point of cuts in borrowing costs this year.
When the Fed's preferred inflation gauge is released Friday, all eyes will be on the housing and services components that have been the sticky areas of cost increases for some time now. But it just might be the goods side of the economy that sees a price jolt soon. That's because of a massive strike that's looming for key ports along the eastern and Gulf coasts. Some 45,000 dockworkers at every major eastern and Gulf coast port are threatening to strike Oct. 1. With talks at a stalemate since June, industry officials now believe a strike is inevitable, and ocean carriers and port operators have started sending out customer advisories. The trade gateways involved handle more than half of all goods shipped in containers to and from the US. A weeklong strike could impose a $4.5 billion to $7.5 billion hit, according to Grace Zwemmer at Oxford Economics. Zwemmer expects that the drag would be made up once the strike is resolved and ports process any backlogs. But the impact could prove much broader than just a temporary trade disruption. The strike threat comes just weeks before the presidential election. Vice President Kamala Harris and former President Donald Trump have each been pushing for union votes. Retailers and some lawmakers have called on the Biden administration to get involved and help head off a strike. The auto parts supply chain would be particularly hard hit in a strike, according to Jason Miller, an expert on supply chains at Michigan State University. That could put carmakers in swing states like Michigan and Georgia in a bind. Also a potential risk: your daily dose of bananas. Two-thirds of them are unloaded at East and Gulf Coast ports. "Any fruit that arrives after Oct. 1 will be condemned to the trash can" if dockworkers walk out, said produce importer Peter Kopke, Sr. "And all of the people who have invested in that business will lose a fortune." For more, subscribe to Supply Lines, our daily newsletter that tracks global trade. - Vice president Kamala Harris and Donald Trump are set for a battle of economic visions at separate election events.
- France's prime minister is weighing taxing the rich and corporations to tackle the country's high debt.
- A US plan to further limit Chinese EVs via software and hardware curbs may have bigger ramifications and result in retaliation, analysts say.
- The UK's Labour government won't return to austerity of predecessors, Chancellor of the Exchequer Rachel Reeves said before her budget.
- A multi-year revision of Italy's economic data removed almost three percentage points off its debt ratio.
- India's economy slows in September by the most all year as services and manufacturing activity dip.
The release this week of US price data that the Fed focuses on, along with a snapshot of consumer demand, may corroborate both the central bank's aggressive rate cut and Chair Jerome Powell's view that the economy remains strong. Further afield, officials from Switzerland to Sweden are likely to reduce borrowing costs too at their decisions this week, while the Reserve Bank of Australia is seen staying on hold. Meanwhile in Paris, the OECD will release new economic forecasts on Wednesday. See here for the rest of the week's economic events. A key ingredient in the global financial crisis was a model for US investment banking that featured reliance on very short term debt — even overnight borrowing — to fund long-term positions. When counterparties refused to roll over the short-term funding, the system collapsed. But with the rise of direct lending, where holders of long-term capital such as family offices are extending credit to companies directly, that's changing. One downside is that this type of lending is less transparent. But Torsten Slok, chief economist at Apollo Global Management, sees an upside to "banks playing a smaller role as providers of credit." "Long-term loans to corporates are moving away from being financed by overnight deposits to instead being financed by long-term liabilities such as insurance and pensions," Slok wrote in a note Sunday. That's "making the financial system more stable," he wrote. | 
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