What Wall Street Wants to Hear at the Debate

What Wall Street wants to hear

With less than two months until the presidential election, there isn’t much time left for singularly impactful moments. Tuesday’s debate between Vice President Kamala Harris and Donald Trump will be one of them — and the corporate world will be paying attention.

The stakes for the showdown, which begins at 9 p.m. Eastern, are high, given how tight the race is and how the last debate, between Trump and President Biden, transformed the contest.

Wall Street wants more insight into Harris’s positions. Candidates rarely make big policy announcements at debates, but business leaders will be watching to see the depth with which she talks about economic policy and how she differentiates herself from Biden. (Behind a surge in support from that community is the hope that Harris will be friendlier to business than the president.)

Here are some questions DealBook would ask Harris about her economic policies:

• What was behind your decision to soften a proposed increase on the capital gains tax?

• What exactly is your proposal to tackle price gouging, given how widely it has been interpreted?

• Are you willing to end the filibuster to pass policies like an expanded child tax credit or a cap on prescription drug prices?

• Would you replace Lina Khan as chair of the F.T.C.?

For Trump, the focus will be on his age and mental fitness. Those issues, which had dogged Biden going into the last debate, ended up sinking his re-election campaign. Now, they are being raised about Trump, who is nearly two decades older than Harris. An especially hard-to-follow answer on child care at the Economic Club of New York last week heightened those concerns for some.

Trump’s response did touch on some of his big economic focuses, including tariffs. Here’s what else DealBook would ask him:

• You favor cutting taxes and raising tariffs, but are you concerned that could widen the income gap?

• How would you respond to analysis that suggests that your trade policy proposals would lead to higher inflation?

• Do you think the Fed should be independent?

• Do you agree with your running mate, Senator JD Vance of Ohio, who supports Khan’s tougher approach to antitrust?

An influential report has weighed in on what each candidate’s policies might mean for the U.S. deficit. The Penn Wharton Budget Model estimates that Trump’s tax and spending proposals would increase primary deficits by up to $5.8 trillion over the next decade. It estimates that Harris’s plans would raise them by up to $2 trillion.

Investors remain on edge about the contest. Measures including the futures curve of the VIX, which tracks stock volatility and is also known as Wall Street’s “fear index,” show that markets are likely to remain unsettled through Election Day.

HERE’S WHAT’S HAPPENING

Prosecutors accuse Google of seeking to illegally crush ad competitors. In opening arguments for a new antitrust case against the tech giant, government lawyers said that the company had abused its dominance of the display-ad market to lock out rivals and charge higher prices. Separately, Google lost its effort to overturn a $2.6 billion fine imposed by the European Union over online shopping practices.

Norfolk Southern’s C.E.O. is reportedly expected to step down. Alan Shaw will leave the railroad operator as soon as this week amid an inquiry by the company’s board into accusations that he had an improper relationship with an employee, according to The Wall Street Journal. Shaw had already been under pressure over investigations into Norfolk Southern after a derailment in East Palestine, Ohio, last year.

SpaceX launches a private spaceflight mission with big ambitions. The company sent up a Falcon 9 rocket on Tuesday with four astronauts on board. The voyage will include the first-ever civilian spacewalk, and if successful could further burnish SpaceX’s reputation at a time when a chief rival, Boeing, is struggling.

DirecTV’s dispute with Disney drags on. The fight over programming fees meant that the satellite pay-TV service’s 11 million customers missed out on ESPN’s “Monday Night Football” last night. They may have to resort to workarounds to watch Tuesday’s presidential debate if the fight isn’t resolved in time.

Apple’s good news and bad news

Apple wanted the world’s attention for its glitzy new product debut, as it introduced its first artificial intelligence-enabled iPhone. But the European Union stole some of its thunder on Tuesday, ruling that the company must pay billions in back taxes in a landmark case.

It’s a blow for Apple. The E.U.’s top court upheld a 2016 decision that Ireland had to collect €13 billion, about $14 billion at today’s exchange rates, for giving Apple a low-tax deal.

Tim Cook, Apple’s C.E.O., has called the tax accusations “political crap,” and the U.S. Treasury Department has accused Brussels of acting as a “supranational tax authority” in ways that could threaten global reforms.

The E.U.’s antitrust chief also fined Apple almost $2 billion in March for using its App Store to limit competition. (Apple is appealing.)

The ruling came hours after Apple tried to show it was gaining ground in A.I. On Monday, the company showed off the iPhone 16, the first model designed to run Apple Intelligence, its A.I. system. Apple has been more cautious on A.I. than others, but analysts reckon that the company’s huge and loyal customer base could give it an edge in the long term.

Apple Intelligence is “focused on personal intelligence and could assist users daily with communication, relive memories, prioritize and focus, and get things done,” Atif Malik, an analyst at Citi, wrote in a research note on Monday.

Big questions loom. Apple Intelligence will be available next month in the U.S., but will roll out more slowly elsewhere, as countries have different usage requirements when it comes to such sensitive tech in consumer devices.

But investors appear satisfied. “Apple is doing just enough to maintain its edge at the high end of the market,” Richard Windsor of Altiplano Open Research wrote in a note on Tuesday. He pointed to other new features, like enabling AirPods to work as hearing aids, thanks to President Biden lifting the F.D.A. requirement that a prescription is needed to get them.

As The Financial Times’s Robert Armstrong points out, despite being slow to the A.I. party, Apple has been the best performing Big Tech stock, after Nvidia, since the pandemic. But how long can that last?

Is inflation still a risk for markets?

Global stocks and U.S. futures have drifted lower as September continues to live up to its billing as a downer of a month for markets — especially in presidential election years.

The S&P 500 snapped a four-day losing streak on Monday, gaining 1.2 percent, with a batch of economic indicators set to be released this week.

Inflation is again in focus. New data comes out tomorrow and on Thursday, starting with the Consumer Price Index, ahead of next week’s Fed meeting.

Friday’s lackluster jobs report has clouded investors’ views on rate cuts. After the release, the futures market dialed up the odds that the central bank would cut its prime lending rate by a half-percentage point. But those calls have retreated on Tuesday to a roughly one in three probability. This week’s inflation data could scramble the view once more.

Here’s what to watch for in tomorrow’s C.P.I.:

• Economists forecast more good news on inflation. The August C.P.I. reading is expected to show a 0.2 percent monthly gain, roughly in line with July. The steady decline in gasoline prices this summer has been a big factor.

• Core inflation, which strips out food and fuel, is forecast to have gone up by 0.2 percent on a monthly basis, and 3.2 percent compared with last year. But the recent trend — looking at the three-month annualized rate — shows inflation falling close to the Fed’s 2 percent target.

• Economists expect services inflation and price gains on new and used cars to continue to fall. But shelter inflation, which has an outsize weight in C.P.I. reports, is still proving tricky. “Generally, we see downside risks to components like shelter inflation,” Veronica Clark, an economist at Citi, wrote in a research note this week.

That said, Citi sees core inflation dipping to 2.1 percent by the first quarter of next year. Another encouraging data point: The New York Fed’s consumer survey on inflation released on Monday held steady, showing household inflation expectations moderating in the long term.

The Fed’s focus is starting to shift to the labor market from inflation. The consensus view is that a recession is not imminent, but the hiring slowdown has caught central bankers’ attention.

“We called them campers. This one couple, they came in every Sunday, and I’d say they ate about 100 shrimp apiece, maybe 120.”

— Zachary Spain, a manager at the Red Lobster location in Times Square, recalling the doomed Ultimate Endless Shrimp promotion that helped drive the restaurant chain into bankruptcy.

Will Trump buy, sell or hold?

Investors and Donald Trump watchers have Sept. 19 circled on their calendars.

On that day, insiders of Trump Media & Technology Group, the unprofitable company behind the former president’s Truth Social online media platform, can begin selling their shares. It’s a deadline that comes with much anticipation and even trepidation.

Should Trump sell, the volatile stock could sink, saddling its investors — many of them Trump supporters — with deeper losses.

Trump’s stake on paper is worth about $2 billion, having fallen by about two-thirds over the past six months. Trump Media’s stock price has gone on a wild ride that appeared to track the swings of the Republican presidential candidate’s own political fortunes.

The Trump faithful believe he won’t bail on the stock. “He has no reason to sell, because he doesn’t need the money,” Greg Bowden, a day trader who said he owns shares of Trump Media, told The Times. “I don’t think he’s that stupid to hurt his loyal base of supporters.”

Trump has options. If he wants to cash in, he could arrange a sale to a single buyer, which could calm antsy investors. He could also borrow against his shares. Both moves, of course, could still put pressure on the stock.

That said, neither Trump nor his campaign have commented on what he might do.

THE SPEED READ

Deals

• The website development platform Squarespace agreed to a sweetened $7.2 billion takeover bid by the private equity firm Permira. (Reuters)

• “The College Dropout Who Invested Billions to Cozy Up With Elon Musk” (WSJ)

Elections, politics and policy

• U.S. bank regulators have reportedly agreed to scale back an increase in capital requirements for the nation’s largest lenders. (Bloomberg)

• How a criminal charge against the investor Andrew Left has unnerved other activist short sellers, who publish critical reports against companies and bet that their stock prices will drop. (NYT)

Best of the rest

• The activist investor Nelson Peltz stepped down as chair of Wendy’s, nearly two decades after first investing in the fast-food chain. (CNBC)

• James Earl Jones, whose thundering vocal tones gave life to roles from the Shakespearean canon and to Darth Vader, died on Monday. He was 93. (NYT)

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